Taxation Administration Excluded Classes of Transactions and Entities for Third Party Reports on Shares and Units Determination 2021
- The ATO released this draft determination on 3 May 2021 along with its draft explanatory statement.
- The determination exempts certain classes of transactions from being reported to the Commissioner and certain entities from having to prepare and lodge reports under the third party reporting regime. It replaces (once in force) an earlier determination registered in 2018, which gave fewer exemptions.
- The determination will commence retrospectively on 1 July 2017.
- Taxpayers who will be covered by the new entity exemptions or are likely to undertake excluded transactions (such as transactions where an entity has reporting obligations under Div 392 of Sch 1 to the Taxation Administration Act 1953, which deals with employee share schemes) should note these reduced reporting requirements.
Practice Statement PS LA 2020/1 Commissioner’s discretion to allow further time for an entity to register for an ABN or provide notice to the Commissioner of assessable income or supplies
- In response to the case of Commissioner of Taxation v Apted  FCAFC 45, the ATO updated this Practice Statement which sets out the circumstances where the Commissioner will exercise his discretion to allow an entity further time to hold an ABN or report business income for the purposes of satisfying the cash flow boost or JobKeeper payment eligibility criteria.
- In Apted, the Full Court of the Federal Court held that the AAT did not err in exercising its discretion to allow Mr Apted to hold an ABN after 12 March 2020 in considering whether he was eligible for JobKeeper payments under s 11(6) of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.
- The updates generally concern the relevant factors for assessing whether or not the Commissioner's exercise of his discretion is appropriate.
Draft Law Companion Ruling LCR 2021 2021/D1 Temporary full expensing
- This draft Ruling deals with temporary full expensing (ie immediate write-off of costs) of depreciating assets as introduced by the JobMaker tax plan legislation.
- The draft Ruling covers the eligible entities for temporary full expensing, the eligible assets, the rules for full expensing, the operation of the rules for consolidated groups, the interaction of the newly introduced temporary full expensing with previously introduced instant asset write-off and backing business investment, and the operation of temporary full expensing for small business entities.
- Taxpayers who are seeking to rely on the temporary full expensing measures should consider whether their relevant entities are eligible for the measure and whether their assets may be eligible for full expensing.
Practice Statement PS LA 2001/13 Franking credits and part payment of liabilities notified on activity statements
- This practice statement concerning the effect that a part payment of activity statement liabilities has on an entity’s entitlement to franking credits has been withdrawn with effect from 17 June 2021.
Taxation Ruling TR 2021/2 Fringe benefits tax: car parking benefits
- Taxation Ruling TR 2021/2 sets out the Commissioner’s view on when the provision of car parking is a car parking benefit for the purposes of the Fringe Benefits Tax Assessment Act 1986.
- For car parking benefits provided on or after 1 April 2022, the Ruling overturns the previous view that car parking facilities with a primary purpose other than providing all-day parking were not commercial parking stations.
- In light of the decision in Virgin Australia Airlines Pty Ltd & Anor v FC of T  FCA 523, the ruling does not address the meaning of “primary place of employment”, but states that it will be amended to include further guidance on this point in due course.
- Taxpayers should consider the guidance provided in this ruling and the impact it has on their fringe benefits tax liability for car parking facilities they provide or that are nearby.
Draft Taxation Determination TD 2021/d1 Income tax: when working out your aggregated turnover, are the relevant annual turnovers of entities connected with you, or entities that are affiliates of yours, determined by reference to your income year?
- This Draft Tax Determination provisionally indicates that when working out a taxpayer’s aggregated turnover under s 328-115 of the ITAA 1997, the taxpayer ought to calculate the annual turnovers of its connected entities and its affiliates for the relevant period that aligns with the taxpayer’s income year, even if those entities operate under an accounting period inconsistent with the taxpayer’s.
- Taxpayers who are relying on falling above or below aggregated turnover thresholds (eg to fall outside TOFA) should consider whether their assessment of aggregated turnover is impacted by different accounting periods for connected entities and affiliates.
Draft Taxation Ruling TR 2021/D3 Income tax: research and development tax offsets - the at risk rule
- The ATO has issued provisional guidance on the “at risk rule” for expenditure on R&D.
- The at risk rule in s 355-405 of ITAA 1997 denies or reduces a notional deduction for the R&D tax offset if, at the time an entity incurs the expenditure, the R&D entity or one of its associates had received (or could reasonably be expected to receive) consideration as a direct or indirect result of expenditure being incurred, and regardless of the results of the activities on which the entity incurs the expenditure.
- When determining whether the "at risk rule" is satisfied, the amount of consideration comprises of the value of both monetary and non-monetary benefits. The Commissioner stated that a broad interpretation of the term “consideration” is applicable to Div 355.
- This Draft Taxation Ruling follows on from Draft Taxation Determination 2020/D1 in which the ATO expresses the view that research and development activities subsidised by JobKeeper payments do not satisfy the "at risk" rule.
- Taxpayers seeking to rely on the R&D tax offset should be conscious of this draft ruling and any subsequent developments when entering into arrangements whereby R&D expenditure is incurred and direct or indirect consideration is received as a result of the expenditure being incurred. Since "consideration" now has a broader interpretation to include both monetary and non-monetary benefits, taxpayers are more likely to be subject to the "at risk rule".
Draft Taxation Ruling 2021/D4 Income tax: royalties - character of receipts in respect of software
- The ATO has issued provisional guidance on when receipts from licensing and distribution of software are royalties. This Draft Taxation Ruling replaces Taxation Ruling TR 93/12, which has been withdrawn.
- According to draft TR 2021/D4, an amount is a royalty to the extent that it is paid or credited as consideration for the:
- grant of a right to do something in relation to software that is the exclusive right of the owner of the copyright in the software;
- supply of know how in relation to software; or
- supply of assistance furnished as a means of enabling the application or enjoyment of a supply of software.
- Taxpayers who license or distribute computer software should consider whether receipts from their transactions may be considered royalties once this ruling comes into force. In particular, software distributors who sub-licence software should note that payments for the right to sub-licence will be considered royalties even when the payment is for the right to grant licences for the simple use of the software.
CGT improvement threshold for 2021-22
- The capital gains tax (CGT) improvement threshold for the 2021–22 year is $156,784 (up from $155,849 for the previous year).
Draft Practical Compliance Guideline PCG 2021/D4 Intangibles Arrangements
- The Commissioner has released preliminary guidance on the ATO's compliance approach to international arrangements connected with the development, enhancement, maintenance, protection and exploitation (DEMPE) of intangible assets. The preliminary guidance is open to comments until 16 July 2021.
- The guideline emphasises ATO's role in reviewing the aforementioned type of arrangements, and in particular, any arrangements which do not accurately represent the nature and extent of Australian activities connected with the DEMPE of intangible assets. The ATO considers that these arrangements may be structured to avoid tax obligations.
- The guideline also advises on compliance risks associated with the potential application of transfer pricing provisions, withholding tax provisions, capital gains tax, capital allowances, the general anti-avoidance rule and the diverted profits tax.
- The ATO has also stipulated a two part risk assessment framework in relation to these risks. The first part sets out the criteria used to conduct the risk assessment while the second part outlines the level of documentary evidence the ATO expects when assessing arrangements against the criteria.
- Taxpayers who have entered into international agreements associated with DEMPE functions relating to intangible assets should consider undertaking a risk assessment under the PCG.