Birchstone Brief for the week ended 18 December 2020

News and Events

Christmas break and office closure

Please note that our offices will be closed from 24 December to 4 January. From all of us at Birchstone Tax Law, we wish you a happy and safe holiday season!

ATO Updates

Law Companion Ruling released: Superannuation fund for foreign residents – withholding tax exemption and sovereign immunity

The ATO has released LCR 2020/3 which provides guidance on key concepts relating to the limitation of the withholding tax exemption for superannuation funds for foreign residents and the codification and limitation of the sovereign immunity tax exemption. The Ruling is effective from 1 July 2019 and replaces the Draft Ruling released on 4 December 2019.

Practical Compliance Guideline updated: Extension of the ‘shortcut method’ for calculating working from home expenses

The ATO has updated PCG 2020/3 to extend the time within which taxpayers can apply the ‘shortcut method’ when claiming working from home expenses. The cut-off date for the shortcut method has been extended from 31 December 2020 to 30 June 2021, allowing taxpayers to claim additional running expenses incurred whilst working from home between 1 March 2020 and 30 June 2021 at a rate of $0.80 per work hour, provided they keep a record of the number of hours worked at home.

State Cases

Western Australia: Payroll tax exemption for subsidised wages to apprentices and trainees

The WA State Government has announced that Western Australian businesses are exempt from paying payroll tax on wage subsidies announced in the 2020-21 Federal Budget. The Boosting Apprenticeships Commencements scheme reimburses businesses who engage an Australian apprentice on or after 5 October 2020 for up to 50% of wages paid to the apprentice between 5 October 2020 and 30 September 2021, to a maximum of $7,000 per quarter.

Victoria: Payroll tax exclusion for contractors

The Victorian State Revenue Office has issued a Revenue Ruling that sets out the factors that the Commissioner will take into account in determining when payments made to a contractor will be excluded from payroll tax for the purposes of the Payroll Tax Act 2007 (Vic). The Revenue Ruling is a response to the decision in Nationwide Towing & Transport Pty Ltd & Ors v Commissioner of State Revenue [2018] VSC 262, in which it was held that the Commissioner does not need to be satisfied that a contractor carries on a ‘genuine independent business’ in order for the relevant payroll tax exclusion to apply. The Revenue Ruling took effect on 15 December 2020.

Other News

Regulatory burden eased for small and medium charities

The Treasurer, Josh Frydenberg, has announced that small and medium charities will receive relief from burdensome financial reporting requirements under an agreement signed by all Federal, State and Territory treasurers. The Council on Federal Financial Relations has agreed to develop a framework by mid-2021 to lift the financial reporting thresholds for over 5,000 small and medium charities.

Cases

Consolidated Mining & Civic Pty Ltd v Commissioner of State Taxation [2020] SASC 233 – Stamp duty (SA): Notional acquisition regarded as a ‘conveyance or transfer’

The Supreme Court of South Australia held that the taxpayer was not exempt from stamp duty because a ‘conveyance or transfer’ should be construed to include a notional acquisition. The taxpayer entered into a share sale agreement to acquire all of the issued shares in a company on 1 June 2018, with completion of the share sale agreement being effected on 11 July 2018. The Commissioner of State Taxation initially assessed the transaction as having no duty liability, and then issued a Notice of Reassessment with duty payable as $245,433.33, which was the subject of the taxpayer’s appeal.

The issue for consideration was whether a transitional provision contained in the Stamp Duties Act 1923 (SA), that disallowed an exemption from stamp duty, applied to the taxpayer’s share acquisition. The transitional provision outlined that a ‘conveyance or transfer of an interest that arises from a contract of sale or other transaction entered into before 1 July 2018’ was not exempt from stamp duty. It was held that a ‘conveyance or transfer’ broadly construed on a purposive basis would include a notional acquisition. Therefore, the transitional provision applied to the share sale agreement entered into on 1 June 2018 and the taxpayer was not exempt from stamp duty.

Legislation

Treasury Laws Amendment (2020 Measures No 5) Bill 2020 (Cth) – Non-assessable non-exempt grant programs and New Zealand KiwiSaver schemes

The Bill that amends taxation laws to treat eligible state and territory small business grants relating to the coronavirus recovery as NANE income and permits the Commissioner to make payments of a New Zealand resident’s unclaimed superannuation directly to New Zealand KiwiSaver schemes has received assent and is now law.

National Emergency Declaration (Consequential Amendments) Bill 2020 (Cth) – Deducting gift made to a disaster relief fund

The Bill that will amend ITAA 1997 to create an alternative test for declaring an event to be a disaster for the purpose of deducting a gift made to a disaster relief fund has passed the Senate and awaits assent.

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