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  • 2022 completed issues

    The following public advice and guidance issues have been completed in 2022.

    [3767] Personal services income – meaning of personal services business

    Purpose

    This Ruling consolidates Taxation Rulings TR 2001/7 Income tax: the meaning of personal services income and TR 2001/8 Income tax: what is a personal services business, which were both withdrawn with effect from 24 November 2022.

    Outcome

    Taxation Ruling TR 2022/3 Income tax: personal services income and personal services businesses published on 23 November 2022.

    [3802] Trust capital gains

    Purpose

    This Determination sets out the Commissioner's view on the taxation treatment of capital gains for a non-resident beneficiary or trustee of a resident trust.

    Outcome

    Taxation Determination TD 2022/12 Income tax: is the source concept in Division 6 of Part III of the Income Tax Assessment Act 1936 relevant in determining whether a non-resident beneficiary of a resident trust, or trustee for that trust, is assessed on an amount of trust capital gain arising under Subdivision 115-C of the Income Tax Assessment Act 1997? published on 31 August 2022.

    [3803] Capital gain from a non-resident beneficiary of a non-fixed trust

    Purpose

    This Determination sets out the Commissioner's view on the taxation treatment of capital gains from non-taxable Australian property assets of a non-fixed trust.

    Outcome

    Taxation Determination TD 2022/13 Income tax: does Subdivision 855–A (or subsection 768–915(1)) of the Income Tax Assessment Act 1997 disregard a capital gain that a foreign resident (or temporary resident) beneficiary of a resident non-fixed trust has because of subsection 115-215(3)? published on 31 August 2022.

    [3917] Employee share schemes – what constitutes a 'genuine disposal restriction'

    Purpose

    This Determination outlines the legal principles for determining whether an ESS’s disposal restrictions were ‘genuine disposal restrictions’ and, if they were, when employees are no longer ‘genuinely restricted’ by the scheme for determining the ESS deferred taxing point.

    Outcome

    Taxation Determination TD 2022/4 Income tax: when are you genuinely restricted from immediately disposing of an interest provided under an employee share scheme? published on 6 April 2022.

    [3922] Research and development – building exclusion

    Purpose

    The proposed Ruling intended to set out the Commissioner's 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.

    Outcome

    A ruling is no longer required on this issue. We have monitored compliance regarding research and development claims and have not identified any ongoing significant or widespread issues regarding the correct application of the building exclusion.

    [3942] Section 100A reimbursement agreements

    Purpose

    This Ruling sets out the Commissioner’s 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.

    Outcome

    Taxation Ruling TR 2022/4 Income tax: section 100A reimbursement agreements published on 8 December 2022.

    Purpose

    This Guideline sets out the Commissioner’s compliance approach to section 100A reimbursement agreements.

    Outcome

    Practical Compliance Guideline PCG 2022/2 Section 100A reimbursement agreements – ATO compliance approach published on 8 December 2022.

    [3950] OECD hybrid mismatch rules

    Purpose

    This Determination considers the interaction of section 951A of the United States (US) Internal Revenue Code (IRC), referred to as the ‘global intangible low-taxed income’ (GILTI) regime, with Australia’s hybrid mismatch rules in Division 832 of the Income Tax Assessment Act 1997 (ITAA 1997).

    Outcome

    Taxation Determination TD 2022/9 Income tax: is section 951A of the US Internal Revenue Code a provision of a law of a foreign country that corresponds to sections 456 or 457 of the Income Tax Assessment Act 1936 for the purpose of subsection 832-130(5) of the Income Tax Assessment Act 1997? published on 29 June 2022.

    [3962] Commercial debt forgiveness – for reasons of natural love and affection

    Purpose

    This Determination sets 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.

    Outcome

    Taxation Determination TD 2022/1 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? published on 9 February 2022.

    [3973] The first element of cost base and other deductible expenditure

    Purpose

    This Determination provides the Commissioner's view on the treatment of liabilities assumed upon acquisition of a CGT asset and whether, on discharge of these liabilities, subsection 110-45(2) of the Income Tax Assessment Act 1997 will apply such that they do no form part of the cost base.

    Outcome

    Taxation Determination TD 2022/14 If a non-contingent liability to pay a specified amount is included in the cost base of your CGT asset under either subsection 100-25(2) or section 112-35 of the Income Tax Assessment Act 1997 and you deduct or can deduct that amount, does subsection 110-45(2) of that Act apply? published on 5 October 2022.

    [3986] Exempt sporting clubs

    Purpose

    This update modernises TR 97/22 (now withdrawn) to clarify whether societies, associations or clubs (referred to collectively as 'clubs') are exempt from income tax under table item 9.1(c) of section 50-45 of the Income Tax Assessment Act 1997.

    Outcome

    Taxation Ruling TR 2022/2 Income tax: the games and sports exemption published on 14 September 2022.

    [3990] Misappropriated or stolen funds

    Purpose

    This update modernises Taxation Ruling TR 93/25 to take into account changes in legislation and case law.

    Outcome

    The update to Taxation Ruling TR 93/25 Income tax: assessability of proceeds from illegal activities, treatment of amounts recovered and deductibility of fines and penalties published on 30 March 2022.

    [3992] Administration of penalties in relation to electronic sales suppression tools

    Purpose

    This Practice Statement provides guidance to staff when imposing and/or remitting administrative penalties relating to the production, supply, possession and use of electronic sales suppression tools.

    Outcome

    Law Administration Practice Statement PS LA 2022/1 Administrative penalties for electronic sales suppression tools published on 24 February 2022.

    [4002] Self-managed super funds – interests in another entity

    Purpose

    This draft Determination proposed to consolidate and update ATO interpretative decisions ATO ID 2008/51 and ATO ID 2008/52.

    Outcome

    On further reflection, we consider this draft Determination is no longer required given the existence of the two ATO IDs and the prioritisation of other advice and guidance products. Industry groups have been consulted regarding the conclusion of this item.

    [4020] Aggregated turnover issues for large business

    Purpose

    This Determination sets out the Commissioner’s view on the application of the ‘connected with’ concept in section 328-125 of the Income Tax Assessment Act 1997 to corporate limited partnerships.

    Outcome

    Taxation Determination TD 2022/5 Income tax: aggregated turnover – application of the ‘connected with’ concept to corporate limited partnerships published on 30 March 2022.

    Purpose

    This Determination sets out the Commissioner’s view on the application of the ‘public entity exception’ to the indirect control test in subsection 328-125(8) of the Income Tax Assessment Act 1997.

    Outcome

    Taxation Determination TD 2022/6 Income tax: aggregated turnover – application of the public entity exception to the indirect control test published on 30 March 2022.

    Purpose

    This Determination sets out the Commissioner’s view on the application of the ‘connected with’ concept in section 328-125 of the Income Tax Assessment Act 1997 to partnerships, foreign hybrids and non-entity joint ventures.

    Outcome

    Taxation Determination TD 2022/7 Income tax: aggregated turnover – application of the ‘connected with’ concept to partnerships, foreign hybrids and non-entity joint ventures published on 30 March 2022.

    [4021] GST – care services and residential accommodation

    Purpose

    This update clarifies when the provision to residents, residing in a serviced apartment within a retirement village, of daily meals and heavy laundry services by an operator, will satisfy the requirements of paragraph 38-25(3A)(b) of the A New Tax System (Goods and Services Tax) Act 1999.

    Outcome

    The update to Taxation Determination GSTR 2012/3 Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels published on 27 July 2022.

    [4026] Tax implications of Inter-bank Offered Rate reform

    Purpose

    This guidance assists businesses to understand the common tax implications when changes are made to financial arrangements due to Inter-bank offered rate (IBOR) reform.

    Outcome

    Web guidance on Inter-bank Offered Rate reform published on 11 March 2022.

    [4027] Market value for tax purposes

    Purpose

    This publication has been updated to include more detail on managing the risk of providing a market value for tax purposes.

    Outcome

    The Market valuation for tax purposes guide published on 29 September 2022.

    [4032] GST and tax law partnerships

    Purpose

    The draft update to GSTR 2004/6 proposed to update our advice and guidance on tax law partnerships to improve the clarity of the general principles.

    Outcome

    Based on current consultation to date with key stakeholders, we have decided not to progress an update to GSTR 2004/6 at this time. We will continue to work with stakeholders in considering what can be achieved through additional web guidance, with the intention to provide useful guidance to assist taxpayers to correctly identify when an arrangement is a tax law partnership, a general law partnership or a joint venture.

    [4033] Unpaid present entitlements of private company beneficiaries

    Purpose

    This Determination sets out the Commissioner's view on when the unpaid present entitlement of a private company beneficiary will be treated as a loan for which there can be dividend consequences under Division 7A, as that beneficiary has provided ‘any other form of financial accommodation’ to the trustee.

    Outcome

    Taxation Determination TD 2022/11 Income tax: Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of 'financial accommodation'? published on 13 July 2022.

    [4034] Employee share schemes – deductibility of establishment and ongoing costs

    Purpose

    This Determination sets out the Commissioner’s view on the deductibility of expenses incurred by an employer to establish and administer an ‘employee share trust' and for operating an employee share scheme on an ongoing basis.

    Outcome

    Taxation Determination TD 2022/8 Income tax: deductibility of expenses incurred in establishing and administering an employee share scheme published on 6 April 2022.

    [4035] Deceased estates – Commissioner’s discretion to extend the 2-year period to dispose of dwellings

    Purpose

    The Guideline provides updated guidance to the community to support self-assessment opportunities, taking into account insights and learnings from the Guideline’s practical application since it issued.

    Outcome

    Practical Compliance Guideline PCG 2019/5 Capital gains tax and deceased estates – the Commissioner's discretion to extend the 2-year period to dispose of dwellings acquired from a deceased estate published on 30 September 2022.

    [4037] Non-commercial business losses – Commissioner's discretion

    Purpose

    The Guideline sets out the Commissioner's view on how the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 may provide a safe harbour for individuals that make a loss from non-commercial business activities due to flood, bushfire or COVID-19.

    Outcome

    Practical Compliance Guideline PCG 2022/1 Non-commercial business losses – Commissioner's discretion regarding flood, bushfire or COVID-19 published on 14 September 2022.

    [4040] Passing on and refund of excess GST

    Purpose

    This Decision impact statement outlines the ATO’s response to the decision of the Administrative Appeals Tribunal in M3K Services Pty Ltd and Commissioner of Taxation [2021] AATA 4416 concerning whether the taxpayer passed on excess goods and services tax (GST) to its customers and, if it had, whether the excess GST was refundable to the taxpayer under section 142-15 of the A New Tax System (Goods and Services Tax) Act 1999.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    [4041] Deductibility of payments to cancel options and rights held by employees

    Purpose

    This Decision impact statement outlines the ATO's response to the Full Federal Court's decision in Clough Limited v Commissioner of Taxation [2021] FCAFC 197 concerning the deductibility under section 8-1 of the Income Tax Assessment Act 1997 of certain amounts paid to directors and employees of a company as a condition precedent to a Scheme of Arrangement to take the company over.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    [4042] Ordinary meaning of the term 'employee'

    Purpose

    This Decision impact statement outlines the ATO’s response to the High Court's decision in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 which concerns whether the applicant was an employee of a labour hire company for the purposes of the Fair Work Act 2009. While not a party to the litigation, the decision of the High Court is relevant to legislation administered by the Commissioner involving the ordinary meaning of the term ‘employee’.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made. Work continues on updating impacted advice and guidance outlined in the decision impact statement.

    [4044] GST and residential colleges

    Purpose

    The Guideline replaces the Residential Colleges GST Tool, which was discontinued from 31 December 2022. The Guideline sets out the Commissioner’s compliance approach for universities and residential colleges supplying accommodation, meals, tertiary residential college courses and religious services to resident students and claiming input tax credits.

    Outcome

    Practical Compliance Guideline PCG 2022/3 Goods and services tax and residential colleges – ATO compliance approach published on 15 December 2022.

    [4045] GST registration – exclusions from turnover

    Purpose

    This Decision impact statement outlines the ATO’s response to the Administrative Appeals Tribunal case of Ian Mark Collins & Mieneke Mianno Collins ATF The Collins Retirement Fund and Commissioner of Taxation [2022] AATA 628 which is the first time the interpretation of the 3 limbs of section 188-25 of the A New Tax System (Goods and Services Tax) Act 1999 has been considered.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    [4046] Disclaimed entitlements to trust income

    Purpose

    This Decision impact statement outlines the ATO's response to the High Court's decision in Commissioner of Taxation v Carter [2022] HCA 10 concerning the liability to tax of default trust beneficiaries who validly disclaimed their entitlement after the year end.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    [4049] Contributions of equity and share capital

    Purpose

    This Decision impact statement outlines the ATO's response to the Federal Court's decision in Aurizon Holdings Limited v Commissioner of Taxation [2022] FCA 368 concerning whether shareholder payments made to a company, which were not in exchange for an issue of shares, qualify as 'share capital' for the purposes of section 975-300 of the Income Tax Assessment Act 1997.

    Outcome

    The comments period for the Decision impact statement has closed and no updates will be made.

    [4050] JobKeeper payments and the 'sovereign entity' exclusion

    Purpose

    This Decision impact statement outlines the ATO’s response to the Federal Court’s decision in Airport Handling Services Australia Pty Ltd v Commissioner of Taxation [2021] FCA 1405 concerning the applicants’ eligibility for JobKeeper payments. The Court considered whether amendments to the ‘sovereign entity’ exclusion in subsection 7(2) of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 operated retrospectively to deprive the applicants of ‘rights’ to JobKeeper payments so as to engage subsection 12(2) of the Legislation Act 2003.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    [4051] GST – valuations and the margin scheme

    Purpose

    This Decision impact statement provides the ATO’s response to the Administrative Appeals Tribunal decision in Decleah Investments Pty Ltd and anor as Trustee for the PRS Unit Trust v Commissioner of Taxation [2021] AATA 4821 concerning the calculation of goods and services tax payable under the margin scheme. The Tribunal considered whether a valuation on an ‘as-is basis’ using hindsight information is an approved valuation under the margin scheme provisions in Division 75 of the A New Tax System (Goods and Services Tax) Act 1999.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    [4053] Cash Flow Boost – small business entity

    Purpose

    This Decision impact statement outlines the ATO’s response to the Administrative Appeals Tribunal decision in Water West Pty Ltd and Commissioner of Taxation [2022] AATA 427, concerning entitlement to the cash flow boost (CFB) and specifically whether there was a reasonable basis upon which the Applicant was a small business entity or a medium business entity for the relevant income year.

    Outcome

    The comments period for this Decision impact statement has closed and no updates will be made.

    Last modified: 02 Mar 2023QC 67956