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  • Advice under development – income tax issues

    We are developing advice and guidance on the following income tax issues.

    [3702] Capital allowances – composite items

    Title
    Draft 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
    April 2023

    Comments
    Draft TR 2017/D1 published on 18 January 2017. Due to the time that has elapsed since the release of the draft Ruling and subsequent developments in the law, we propose to reissue a revised draft Ruling for public consultation. The revised draft Ruling will also incorporate changes made to address earlier feedback provided. Contact PAGPW&IC@ato.gov.au if there are any queries in relation to this proposed approach.

    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, Office of the Chief Tax Counsel
    Phone: (02) 9374 2035
    Jo.Torrens@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
    March 2023

    Comments
    Draft guidance was issued for consultation on 31 January 2017. Finalisation of this item has been delayed due to enactment of new legislation and other priority work.

    Staged updates have commenced and are planned to be released as updated web guidance.

    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. Finalisation of this item has been delayed due to other priority work.

    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
    Mid 2023

    Comments
    Finalisation of this item has been delayed due to other priority work.

    Contact
    Peter Glindemann, Office of the Chief Tax Counsel
    Phone: (07) 3213 5401
    Peter.Glindemann@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
    April 2023

    Comments
    We have received a number of submissions on 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

    [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
    July 2023

    Comments
    Draft TR 2019/D1 published on 27 March 2019. Completion of the final Ruling is now progressing following the enactment of the 2020–21 Budget measure to clarify income tax exemptions for International Monetary Fund and World Bank Group short-term missions.

    Contact
    Simon Weiss, Office of the Chief Tax Counsel
    Phone: (02) 6216 1943
    Simon.Weiss@ato.gov.au

    [4000] Royalties and software

    Title
    Draft Taxation Ruling
    Income tax: royalties – character of receipts in respect of software

    Purpose
    Advice on the development and marketing of software was previously 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
    Mid 2023

    Comments
    Draft TR 2021/D4 published on 25 June 2021. Having regard to comments and submissions received in relation to original draft TR 2021/D4, the Commissioner is preparing a revised draft Ruling to issue for further public comment.

    Contact
    Joseph Meoli, Public Groups and International
    Phone: (02) 9374 1853
    Joseph.Meoli@ato.gov.au

    [4005] Expenses associated with vacant land

    Title
    Final Taxation Ruling
    Income tax: expenses associated with holding vacant land

    Purpose
    The final Ruling will provide the Commissioner's view in relation to the application of section 26-102 of the Income Tax Assessment Act 1997.

    Expected completion
    March 2023

    Comments
    Draft TR 2021/D5 published on 4 August 2021. Completion of this product has been delayed; however, we are actively working to finalise this Ruling.

    Contact
    Michelle Gainford, Individuals and Intermediaries
    Phone: (02) 6058 7954
    Michelle.Gainford@ato.gov.au

    For more information, see Consultation matter [202024].

    [4028] Use of an individual's image

    Title
    Final Taxation Determination
    Income tax: use of an individual’s image by related entities

    Purpose
    The final Determination will set out the Commissioner’s view on how section 6-5 of the Income Tax Assessment Act 1997 applies to arrangements where an individual with fame establishes a connected entity and enters into an agreement with that entity granting it non-exclusive use of their name, image, likeness, identity, reputation and signature.

    Expected completion
    To be advised

    Comments
    Draft TD 2022/D3 published on 5 October 2022. Comments period closed on 4 November 2022.

    Contact
    Sharon Imbert, Individuals and Intermediaries
    Phone: (02) 9354 3115
    Sharon.Imbert@ato.gov.au

    [4029] Residency tests for individuals

    Title
    Final Taxation Ruling
    Income tax: residency tests for individuals

    Purpose
    The final Ruling will provide the Commissioner's guidance to individuals to enable them to self-assess their residency status.

    Expected completion
    May 2023

    Comments
    Feedback received on Draft TR 2022/D2 is being considered.

    Contact
    Ruth Geary, Individuals and Intermediaries
    Phone: (02) 6058 7157
    Ruth.Geary@ato.gov.au

    [4039] Commissioner’s discretion to determine that an entity does not control another entity

    Title
    Draft Taxation Determination
    Income tax: Commissioner’s discretion to determine that an entity does not control another entity

    Purpose
    This draft Determination will set out the Commissioner's preliminary view on the meaning of ‘control’ for the purpose of exercising the discretion under subsection 328-125(6) of the Income Tax Assessment Act 1997.

    Expected completion
    April 2023

    Contact
    Harsh Datt, Office of the Chief Tax Counsel
    Phone: (02) 9374 2867
    Harsh.Datt@ato.gov.au

    [4052] Working from home deductions

    Title
    Final Practical Compliance Guideline
    Claiming a deduction for additional running expenses incurred while working from home – ATO compliance approach

    Purpose
    This final Guideline is being developed to outline a new method for claiming working from home expenses.

    Expected completion
    February 2023

    Comments
    Draft PCG 2022/D4 published on 2 November 2022. Comments period closed on 30 November 2022. Feedback provided is currently being considered and the final Guideline is expected to publish in February 2023.

    Contact
    Kim Hall, Individuals and Intermediaries
    Phone: (07) 3149 5412
    Kim.Hall@ato.gov.au

    [4055] Financial advice fees

    Title
    Draft Taxation Determination
    Income tax: deductions for fees paid for financial advice

    Purpose
    This draft Determination will set out the Commissioner's preliminary view on the deductibility of financial advice fees under sections 8-1 (deductions) or 25-5 (deductions for tax related expenses) of the Income Tax Assessment Act 1997 for individuals who are not carrying on a business.

    This Determination will broaden and update TD 95/60, which will be withdrawn when the updated Determination issues.

    Expected completion
    Mid 2023

    Contact
    Danijela Jablanovic, Individuals and Intermediaries
    Phone: (07) 3213 5864
    Danijela.Jablanovic@ato.gov.au

    [4056] Decline in value of a depreciating asset

    Title
    Final Decision impact statement on Commissioner of Taxation v Shell Energy Holdings Australia Limited [2022] FCAFC 2

    Purpose
    The final Decision impact statement will provide the ATO’s response to the Full Federal Court decision, which concerned whether the amount of the deduction available under section 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997) for the decline in value of a depreciating asset acquired by Shell was the cost of that asset by virtue of the operation of section 40-80 of the ITAA 1997.

    Expected completion
    To be advised

    Comments
    The draft Decision impact statement on Commissioner on Taxation v Shell Energy Holdings Australia Limited [2022] FCAFC 2 published on 31 January 2023. Comments close on 3 March 2023.

    Contact
    Nitin Gulati, Office of the Chief Tax Counsel
    Phone: (02) 9285 1661
    Nitin.Gulati@ato.gov.au

    Last modified: 30 Jan 2023QC 50315