MONDAY
FBT exemption for electric cars Bill passed
The Treasury Laws Amendment (Electric Car Discount) Bill 2022 Bill has been passed by the Senate. It amends the FBTAA 1986 to exempt from fringe benefits tax cars that are zero or low emissions vehicles held by the provider and used by or made available for private use of employees. Additionally, to be eligible for the exemption the value of the car at the first retail sale must be below the luxury car tax threshold for fuel efficient cars. The operation of the amendment will be reviewed after three years in light of electric car take up. Date of effect: The Bill applies to fringe benefits provided on or after 1 July 2022 for cars that are eligible zero or low emissions vehicles that are first held and used on or after 1 July 2022.
Failure to discharge onus re assessments based on gambling activities
Two taxpayers, who were brothers, have been unsuccessful before the AAT in their review against amended assessments issued to them which increased their taxable incomes by some $3.5m over 3 income years. The amended assessments were based on records obtained by the ATO from the Crown Casino Melbourne in relation to their gambling activities undertaken there. In finding that the taxpayers failed to discharge the onus of proving that the assessments were “excessive”, the AAT took into account the fact that the taxpayers declined to give evidence in the proceedings, including being cross examined. It also found there was no substantive evidence as to the actual source of the funds used in their extensive gambling activities. (Cammarano and FCT [2022] AATA 3910, 21 November 2022.)
Capital gain could not be offset by debt due to partnership
The Federal Court has confirmed that a capital gain made by a retiring partner for goodwill of the partnership could not be reduced by debts the partner owed to the partnership that were payable on his retirement under to a “set-off” clause” in the partnership deed. In arriving at this conclusion, the Court found that the relevant capital gain crystallised before the “set-off” clause in the partnership deed came into operation. The Court also noted that even though the capital gain was to be applied to offset the partner’s obligation to repay debts he owed the partnership, nevertheless the capital proceeds from the CGT event were not reduced by the reason of that offset. (Hedges v FCT [2022] FCA 1389, 23 November 2022.)
TUESDAY
Measures No 2 Bill 2022 passes Parliament
The Treasury Laws Amendment (2022 Measures No 2) Bill 2022 has passed Parliament and awaits Royal Assent. It will: require electronics platform operators to provide information on transactions to the ATO; enable small business entities to apply to the AAT for an order staying, or otherwise affecting, the operation or implementation of decisions of the Commissioner being reviewed by the AAT; enable the Commissioner to direct an entity to complete an approved recordkeeping course as an alternative to financial penalties where they reasonably believe the entity has failed to comply with its tax-related recordkeeping obligations; removes the $250 non-deductible threshold for work-related self-education expenses; and enable individuals aged 55 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their main residence.
ATO list of completed issues for 2022
The ATO has advised that a range of public advice and guidance issues have been completed in 2022. They include the following issues: Personal services income – meaning of personal services business; Trust capital gains; Capital gain from a non-resident beneficiary of a non-fixed trust; Employee share schemes – what constitutes a “genuine disposal restriction”; Research and development – building exclusion; OECD hybrid mismatch rules; Commercial debt forgiveness – for reasons of natural love and affection; The first element of cast base and other deductible expenditure; Exempt sporting clubs; Misappropriated or stolen funds; Administration of penalties in relation to electronic sales suppression tools; Self-managed super funds – interests in another entity; Aggregated turnover issues for large business; GST – care services and residential accommodation; and, Market value for tax purposes.
Draft GST determinations re tax invoices
The ATO has released 10 draft GST Determinations that broadly waive the requirement to hold a tax invoice pursuant s 29-10(3) of the GST Act 1999 in relevant circumstances (and which also replace existing determinations). Comments on the draft instruments are due by 16 December 2022. For full list of the draft Determinations, see here.
WEDNESDAY
FBT exemption for electric car Bill passed
The Government has advised that the Treasury Laws Amendment (2022 Measures No 2) Bill has passed Parliament. The legislation provides a FBT exemption for eligible cars made available for employees by employers. By way of example, the government said that for a model valued at about $50,000, it means a $9,000 benefit to an employer or a $4,700 benefit to an employee using a salary sacrificing arrangement. The measures will apply retrospectively to eligible cars first used on or after 1 July 2022. Eligible plug‑in hybrid electric vehicles will also be FBT exempt when provided under arrangements entered into before 1 April 2025.
No supply for GST purposes
A taxpayer has been denied GST credits and decreasing adjustments despite the fact that under its contractual arrangements it paid GST on more than it received for its various supplies. The taxpayer carried on business as an agent for a telco, selling the telco’s telephone and tablet accessories. Under the arrangement, the taxpayer invoiced its customer for the total price of the accessories it sold. The telco then provided a credit to the customer at one of several specified levels (the “Accessory Repayment Amount” or “ARA”), a common amount being $240. The ARA was listed on the taxpayer’s invoice to the customer as a credit against the cost of the accessories. Meanwhile in the contract between the telco and the customer, the telco promised to pay the ARA (of $240) to the taxpayer on behalf of the customer. However, in accordance with its contract with the taxpayer, the Telco paid a lesser amount (the “ARO Payment”) to the taxpayer, for example, where the ARA is $240, the ARO Payment was $196.80. At issue was the GST treatment of the $43.20 – the difference/shortfall between the ARA ($240) and the ARO Payment ($196.80).
Ultimately, the AAT denied the taxpayer an entitlement to GST credits or decreasing adjustments in respect of the difference/shortfall, principally because it determined that there was no taxable supply by the telco to the taxpayer that could give rise to GST credits for the taxpayer and no change in the consideration for the taxable supply to the customer giving rise to any decreasing adjustment. (SVYR and FCT [2022] AATA 3994, 24 November 2022.)
ASIC acts against SMSF auditors
ASIC has advised that it has taken action against six SMSF auditors for breaches of independence requirements and auditing standards. Over the period 29 June 2022 to 30 September 2022, ASIC: disqualified three SMSF auditors from being registered; imposed additional conditions on the registration of one SMSF auditor; and cancelled the registration of two SMSF auditors. Five of these SMSF auditors were referred to ASIC by the ATO. One SMSF auditor did not comply with conditions imposed by ASIC on their SMSF auditor registration. These actions resulted from breaches of obligations including auditing and assurance standards, independence requirements, and registration conditions, or because ASIC was satisfied the individual was not a fit and proper person to remain registered.
Director ID deadline effectively extended to 14 December
The Commissioner of Taxation has advised that the Australian Business Registry Services (ABRS) will apply a pragmatic compliance approach to directors who are required to apply for a director ID by 30 November 2022, if they apply by 14 December 2022. In particular, he said that the ABRS will not apply compliance resources to determine whether individuals met their director ID obligations by 30 November 2022 if they apply for a director ID by 14 December 2022 and that while penalties can apply, the community can expect ABRS to take a reasonable approach to support people to apply.
THURSDAY
Measures No 5 Bill introduced – Deductible Gift Recipients
The Treasury Laws Amendment (2022 Measures No. 5) Bill 2022 has been introduced into Parliament. Among other things, the Bill will: (a) list Melbourne Business School Limited, Leaders Institute of South Australia Incorporated, St Patrick’s Cathedral Melbourne Restoration Fund, Jewish Education Foundation (Vic) Ltd, Australian Education Research Organisation Limited, and Australians for Indigenous Constitutional Recognition Ltd as deductible gift recipients; (b) extend the deductible gift recipient listings of Sydney Chevra Kadisha and Australian Women Donors Network; and (c) remove the deductible gift recipient listing of the Mt Eliza Graduate School of Business and Government Limited. The measures generally apply to gifts made on or after 1 July 2022 and other various dates. Note: The measures were originally introduced in Treasury Laws Amendment (2022 Measures No 4) Bill 2022 but have now been separated into this new Bill.
ATO: GST and mortgagees in possession
The ATO has released information about when a mortgagee in possession is liable for GST on the sale of a property. It covers the following issues: determining if GST applies; when GST is not payable; reporting and paying GST; and how to get assistance. The information provides that a person becomes a mortgagee in possession when they take possession of a mortgagor’s property to exercise your power of sale under the mortgage and that the person will be liable to pay GST on the sale of the property if: they sell the property to pay off the mortgagor’s debt; and the sale would have been subject to GST (a taxable sale) if the mortgagor had sold the property.
FRIDAY
ATO: Avoid losing DGR status
The ATO has issued a reminder that most non-government deductible gift recipients (DGR) need to register as a charity before 14 December 2022 or they will lose DGR status. If you have not-for-profit clients that are endorsed as a DGR, remind them to check if they continue to meet the requirements for DGR endorsement or they may have their endorsement revoked.
DGR requirements
Most non-government DGRs need to register as a charity before 14 December 2022 or they will lose DGR status.
Legislative amendments passed into law in 2021, require that a DGR must:
- meet the definition of an Australian government agency, or
- be a registered charity, or
- be operated by a registered charity or an Australian government agency, or
- be an ancillary fund or a DGR that is specifically listed by name in tax legislation.
How the ATO are engaging DGRs
The ATO is issuing correspondence to DGRs that are not yet registered as a charity, as required under Treasury Laws Amendment (2021 Measures No. 2) Act 2021. DGRs will receive an email or a letter as a reminder that they need to check they continue to meet the requirements for DGR endorsement.
Tax professionals representing these DGRs will also be sent corresponding advice. If they act on behalf of multiple DGRs they will receive one email or letter with a list of DGRs that are not yet registered as a charity.
Need more time?
Eligible organisations who need more time to meet the requirements can apply for a 3-year extension.
A completed application must be submitted before 14 December 2022 for it to be considered. If approved, they will have until 14 December 2025 to meet the new eligibility requirements for DGR endorsement.
What if your client doesn’t meet the requirements?
DGRs that don’t meet the new eligibility requirements or haven’t applied for a 3-year extension by the required date will no longer be entitled to DGR endorsement and will have their status revoked.
A DGR that has their status revoked, will be able to re-apply for endorsement if they later satisfy DGR requirements.
Further information and support
More details on the changes and action required can be found here.
The ATO has a dedicated advice service for not-for-profits that operates from 8.00am to 6.00pm, Monday to Friday, and you can call them on 1300 130 248.
Transactions exempt from reporting obligations – new Determination
Taxation Administration: Classes of Electronic Payment System Transactions Exempt from Being Reported in Third Party Reports Determination 2022 has been registered. It exempts administrators of payment systems from having to include specified classes of transactions in reports prepared and given to the Commissioner of Taxation, and repeals and replaces legislative instrument Classes of Electronic Payment System Transactions Exempt from Being Reported in Third Party Reports Determination 2021. Note: It repeals the 2021 version of the instrument.
Matter re-allocated to correct tribunal
The AAT has ruled that an application for a review of an objection decision was not a “small business taxation” matter and, accordingly, it re-allocated it to the Taxation and Commercial Division from the Small Business Taxation Division where it was intended to be lodged (and which would have provided benefits to the taxpayer). The AAT did so essentially on the basis that the taxpayer’s application suggested (as confirmed in an initial directions hearing) that he denied he was carrying on any relevant business. (SNSV and FCT [2022] AATA 4047, 29 November 2022.)
