Show download pdf controls
  • Advice under development – income tax issues

    Effect of COVID-19 on our work

    Our public advice and guidance program continues to have a focus on COVID-19 related issues. Income tax issues on which we are currently preparing COVID-19 related guidance include the following:

    However, we have returned to our ongoing program of work and are updating the status of issues listed on the Program.

    If you are concerned about the delay in the delivery of particular pieces of public advice and guidance, email us at publicguidance@ato.gov.au

    See also

    [3702] Capital allowances – composite items

    Title
    Final 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
    November 2021

    Comments
    Draft TR 2017/D1 published on 18 January 2017. Finalisation of the Ruling has been delayed due to other priority work, however, this has been reassessed and will progress as a priority, recognising the community’s need for certainty when considering the temporary full expensing measure.

    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, Tax Counsel Network
    Phone: (02) 9374 2035
    Jo.Torrens@ato.gov.au

    Kim.Hall@ato.gov.au

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

    Title
    Final Taxation Ruling
    Income tax: the meaning of personal services income and what is a personal services business

    Purpose
    The final Ruling will provide a consolidation of TR 2001/7 Income tax: the meaning of personal services income and TR 2001/8 Income tax: what is a personal services business.

    Expected completion
    February 2022

    Comments
    Draft TR 2021/D2 published on 11 March 2021. Finalisation of the Ruling is delayed as we continue to consider the issues raised by taxpayers in relation to the draft Ruling.

    Contact
    Deb Masterton, Small Business
    Phone: (03) 6221 0671
    Deb.Masterton@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
    Late 2021

    Comments
    Draft guidance was issued for consultation on 31 January 2017. Further updates are on hold pending the enactment of the new legislation.

    Staged updates have commenced and are planned to be released progressively.

    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.

    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
    To be advised

    Contact
    Geoff Gibbons, Tax Counsel Network
    Phone: (03) 6221 0281
    Geoff.Gibbons@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
    November 2021

    Comments
    We have received a number of submissions on the 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

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

    Title
    Final Taxation Determination
    Income tax: employee share schemes – when you are genuinely restricted from disposing of a beneficial interest in a right or share

    Purpose
    The final Determination will set out the Commissioner’s preliminary view on when an employee is considered to be genuinely restricted from disposing of their beneficial interest in a right or share acquired under an employee share scheme, for the purposes of paragraphs 83A-105(6)(b), 83A-115(4)(b), 83A-115(7)(d) and 83A-120(4)(c) of the Income Tax Assessment Act 1997.

    Expected completion
    To be advised

    Comments
    Draft Determination TD 2021/D5 published on 14 October 2021. Comments period closes 12 November 2021

    Contact
    Erc Pepicelli, Private Wealth
    Phone: (08) 7422 2179
    Erc.Pepicelli@ato.gov.au

    [3922] Research and development – building exclusion

    Title
    Draft Taxation Ruling
    Income tax: research and development tax offset: expenditure incurred to acquire or construct a building

    Purpose
    The draft Ruling will set out the Commissioner's preliminary 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.

    Expected completion
    To be advised

    Contact
    Tom Rengers, Private Wealth
    Phone: (07) 3213 6955
    Tom.Rengers@ato.gov.au

    [3929] Research and development – expenditure not at risk

    Title
    Final Taxation Ruling
    Income tax: research and development tax offsets – the ‘at-risk’ rule

    Purpose
    The final Ruling will explain the scope and operation of section 355-405 of the Income Tax Assessment Act 1997 which limits claims to R&D expenditure that is ‘at risk’. We are aware of some ongoing uncertainty about the application of the ‘at risk’ requirement to various scenarios where the R&D activities are carried out in the context of commercial contracts for the supply of goods or services. The advice will address these scenarios, other concerns with the operation of the provisions and bring together existing advice and guidance on these issues.

    Expected completion
    To be advised

    Comments
    Draft TR 2021/D3 published on 25 June 2021. Comments period closed on 23 July 2021. This product has been drafted with the benefit of the feedback received following publication of Draft Taxation Determination TD 2020/D1 Income tax: notional deductions for research and development activities subsidised by JobKeeper payments. Both products will be finalised following public consultation on this product.

    Contact
    PAGCentre@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
    To be advised

    Comments
    Finalisation is delayed pending enactment of the 2020–21 Budget Measure ‘Privileges and Immunities – clarify income tax exemptions available to individuals engaged by the International Monetary Fund and the World Bank Group’.

    Contact
    Simon Weiss, Tax Counsel Network
    Phone: (02) 6216 1943
    Simon.Weiss@ato.gov.au

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

    Title
    Final Taxation Determination
    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?

    Purpose
    The final Determination will set 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.

    Expected completion
    November 2021

    Comments
    Draft TD 2019/D9 published on 2 October 2019. Comments closed on 1 November 2019. We have considered the comments received on TD 2019/D9. While we maintain our view in TD 2019/D9 on the status of the creditor, we are considering expanding the final Determination to include our position on the status of the debtor and how the exemption applies to partnerships.

    Contact
    Peter Glindemann, Tax Counsel Network
    Phone (07) 3213 5401
    Peter.Glindemann@ato.gov.au

    [3990] Misappropriated or stolen funds

    Title
    Addendum to Taxation Ruling TR 93/25
    Income tax: assessability of proceeds from illegal activities, treatment of amounts recovered and deductibility of fines and penalties

    Purpose
    This Addendum will modernise TR 93/25 to take into account changes in legislation and case law.

    Expected completion
    November 2021

    Comments
    Publication has been delayed to allow for further consideration on the scoping of the product.

    Contact
    Simon Weiss, Tax Counsel Network
    Phone: (02) 6216 1943
    Simon.Weiss@ato.gov.au

    [3991] Professional firms – allocation of profit guidelines and Everett assignment

    Title
    Final Practical Compliance Guideline
    Allocation of professional firm profits – ATO compliance approach

    Purpose
    This final Guideline will explain how the ATO intends to apply compliance resources when considering the allocation of professional firm profit or income in the assessable income of individual professional practitioners. It will also assist individual practitioners to self-assess their risk against risk assessment factors. When finalised, this Guideline will replace the professional firm guidelines that were suspended in December 2017.

    Expected completion
    November 2021

    Comments
    Draft PCG 2021/D2 published on 1 March 2021. Comments period closed on 16 April 2021. Feedback from public consultation has been considered and a number of changes made to the Guideline.

    The publication date for the final Guideline is being extended to take account of workshops with the Professional Associations to test the practical application of the revised Guideline and other implementation matters, including communication.

    Contact
    ProfessionalPdts@ato.gov.au

    See also

    [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
    Early 2022

    Comments
    Draft TR 2021/D4 published on 25 June 2021. Comments period closed on 30 July 2021. In response to community feedback the draft Ruling will be updated to provide clarity of the Commissioner’s view on the application of Australia’s double tax agreements to relevant cases and the circumstances where the final Ruling will apply before its date of issue. The draft Ruling will also be updated to include amended and new examples. Included will be an example where a receipt requires apportionment. A further draft Ruling will be published before completion.

    Contact
    Christopher Ferguson, Public Groups and International
    Phone: (03) 9285 1613
    Christopher.Ferguson@ato.gov.au

    [4005] Expenses associated with vacant land

    Title
    Final Taxation Ruling
    Expenses associated with vacant land

    Purpose
    This final Ruling will provide guidance in relation to the application of section 26-102 of the Income Tax Assessment Act 1997.

    Expected completion
    To be advised

    Comments
    Draft TR 2021/D5 published on 4 August 2021. Comments period closes 17 September 2021.

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

    See also

    [4007] Research and development activities subsidised by JobKeeper payments

    Title
    Final Taxation Determination
    Income tax: notional deductions for research and development activities subsidised by JobKeeper payments

    Purpose
    The final Determination will set out the Commissioner’s view on how the ‘at risk rule’ applies to JobKeeper payments received by a research and development entity.

    Expected completion
    To be advised

    Comments
    Draft TD 2020/D1 published on 27 July 2020. Comments period closed on 24 August 2020. Extensive feedback was received on the draft Determination and covered issues relevant to the broader application of the R&D ‘at risk’ rule. Draft Taxation Ruling TR 2021/D3 Income tax: research and development tax offsets – the at risk rule, published on 25 June 2021, has been developed with the benefit of that feedback.

    Draft TD 2020/D1 reflects the Commissioner’s current view on the application of the R&D ‘at risk’ rule to JobKeeper payments. Finalisation of this product will occur following consultation of TR 2021/D3 to ensure both products take into account any further feedback received during consultation of the broader Ruling.

    Contact
    Elliott Wilson, Tax Counsel Network
    Phone: (08) 8208 1336
    Elliott.Wilson2@ato.gov.au

    [4020] Aggregated turnover issues for large business

    Title
    Final Taxation Determination
    Income tax: aggregated turnover – application of the ‘connected with’ concept to corporate limited partnerships

    Purpose
    The final Determination will set out the Commissioner’s view on the application of the ‘connected with’ concept in subsection 328-125(2) of the Income Tax Assessment Act 1997 to corporate limited partnerships.

    Expected completion
    Early 2022

    Comments
    Draft TD 2021/D3 published on 13 October 2021. Comments period closes on 12 November 2021

    Contact
    PGIPAGUnit@ato.gov.au

    Title
    Final Taxation Determination
    Income tax: aggregated turnover – application of the ‘connected with’ concept to partnerships, foreign hybrids and non-entity joint ventures

    Purpose
    The final Determination will set out the Commissioner’s view on the application of the ‘connected with’ concept in subsection 328-125(2) of the Income Tax Assessment Act 1997 to partnerships, foreign hybrids and non-entity joint ventures.

    Expected completion
    Early 2022

    Comments
    Draft TD 2021/D2 published on 13 October 2021. Comments period closes on 12 November 2021.

    Contact
    PGIPAGUnit@ato.gov.au

    Title
    Final Taxation Determination
    Income tax: aggregated turnover – application of the public entity exception to the indirect control test

    Purpose
    The final Determination will set 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.

    Expected completion
    Early 2022

    Comments
    Draft TD 2021/D4 published on 13 October 2021. Comments period closes on 12 November 2021.

    Contact
    PGIPAGUnit@ato.gov.au

    [4022] Temporary full expensing

    Title
    Final Law Companion Ruling
    Temporary full expensing

    Purpose
    The final Ruling will complement existing ato.gov content with more detailed guidance on the application of the temporary full expensing rules. It addresses specific issues raised from external stakeholders since introduction of the measure, including how the temporary full expensing rules interact with the Instant Asset Write-Off and Backing Business Investment provisions, as well as consolidation interaction issues.

    Expected completion
    November 2021

    Comments
    Draft LCR 2021/D1 published on 9 June 2021. Comments period closed on 23 July 2021. Feedback from public consultation is being considered.

    Contact
    Grahame Hager, Tax Counsel Network
    Phone: (02) 9374 8762
    Grahame.Hager@ato.gov.au

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

    Title
    Technical Discussion paper
    Tax implications of Inter-bank Offered Rate reform

    Purpose
    The intended guidance will address the common tax consequences that should be considered by taxpayers as a result of Inter-bank Offered Rate reform, including the future cessation of London Inter-bank Offered Rate.

    Expected completion
    December 2021

    Comments
    TDP 2021/1 published on 12 August 2021. Comments period closed on 10 September 2021. We are in the process of reviewing comments and issues raised during consultation.

    Contact
    Philemon Daniel, Public Groups and International
    Phone: (02) 9374 2089
    Philemon.Daniel@ato.gov.au

    See also

    [4027] Market value for tax purposes

    Title
    Web Guidance
    Market valuation for tax purposes

    Purpose
    The publication is being updated to include more detail on managing the risk of providing a market value for tax purposes.

    Expected completion
    December 2021

    Comments
    Targeted consultation has occurred on the draft product and wider consultation is currently on foot.

    Contact
    Keiron Galloway, Private Wealth
    Phone: (03) 6221 0448
    Keiron.Galloway@ato.gov.au

    See also

    [4028] Use of an individual's image

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

    Purpose
    This draft Determination will set out the Commissioner’s proposed 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
    This draft Determination updates the view previously expressed in draft Practical Compliance Guideline PCG 2017/D11, which was withdrawn on 24 August 2018.

    Targeted consultation has occurred on the draft product.

    Contact
    David Hotstone, Individuals and Intermediaries
    Phone: (02) 6058 7803
    David.Hotstone@ato.gov.au

    [4029] Residency tests for individuals

    Title
    Draft Taxation Ruling
    Income tax: residency tests for individuals

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

    Expected completion
    December 2021

    Comments
    In the Decision Impact Statement dealing with the decision in Harding v Commissioner of Taxation [2018] FCA 837External Link, the Commissioner advised that Taxation Ruling IT 2650 Income tax: residency – permanent place of abode outside Australia would be updated to reflect the interpretation of 'place of abode'. TR 98/17 Income tax: residency status of individuals entering Australia will also be updated.

    Consolidating these residency rulings and adding content to complete the subject matter will clarify the law regarding how taxpayers self-assess residency and reduce uncertainty and the need for further engagement with the ATO.

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

    Last modified: 11 Nov 2021QC 50315