Birchstone Brief for the week ended 19 February 2021

ATO Updates

Taxation Ruling 2021/1 – Deductions allowed for employee transport expenses

The ATO has released Taxation Ruling 2021/1 which sets out when an employee can deduct transport expenses under s 8-1 of the Income Tax Assessment Act 1997 (Cth). The Ruling outlines the general principle that expenses incurred in travelling between different work locations are deductible, while expenses incurred in travelling between home and a regular place of work are not deductible. The Ruling also provides examples of the deductibility of transport expenses in common situations. The Ruling applies before and after the date of its issue.

Draft Taxation Ruling TR 2021/D1 and Draft Practical Compliance Guideline PCG 2021/D1 – Allowances, accommodation and food and drink expenses

The ATO has released Draft Taxation Ruling TR 2021/D1 and Draft Practical Compliance Guideline PCG 2021/D1.

The Draft Ruling sets out the following:

• the difference between a travel allowance and a living-away-from-home allowance;
• the FBT implications where an employee is reimbursed for accommodation and food and drink expenses, or where the employer provides or pays for these expenses; and
• when an employee can deduct accommodation and food and drink expenses when they are travelling on work, including apportionment requirements.

The Draft PCG accompanies the Draft Ruling and sets out the ATO’s compliance approach to assist employers to work out whether an employee is travelling on work or living at a location away from home to determine the nature of an allowance that has been paid.

Class Rulings

The ATO has issued Class Ruling CR 2021/14 which sets out the tax consequences of the return of capital paid by way of an in specie distribution by Metgasco Ltd.

Expansion of Single Touch Payroll: Delayed commencement date

The ATO has announced that the commencement date for mandatory reporting under the expanded Single Touch Payroll program will be postponed from 1 July 2021 to 1 January 2022.

State Taxes

NSW: Guidelines on Reduction in Land Value for Build-to-rent Properties

Revenue NSW has released guidelines on the land tax discount available for certain build-to-rent properties. From 2021 to 2040, qualifying build-to-rent properties will have their land value reduced by 50% for land tax purposes. The guidelines set out the Chief Commissioner’s view on whether a particular property is being used and occupied as a build-to-rent property so that the concession can be granted.

Cases

FCT v Bogiatto (No 2) [2021] FCA 98 – Significant penalties for promoters of R&D exploitation scheme

The Federal Court has ordered that a chartered accountant and his associated companies pay penalties totalling more than $22.5 million for the promotion of R&D exploitation schemes. In FCT v Bogiatto [2020] FCA 1139, the accountant and his associated companies were found to have breached the promoter penalty rules by promoting refundable R&D tax incentive offsets when the claims were not reasonably arguable (case summarised in the Birchstone Brief for the week ended 5 February 2021).

Legislation

Treasury Laws Amendment (Your Future, Your Super) Bill 2021 – Changes to superannuation legislation

A Bill which proposes changes to superannuation legislation has been introduced into Parliament. The Bill contains three schedules:

• Schedule 1 amends the Superannuation Guarantee (Administration) Act 1992 (SGA Act) to restrict the creation of multiple superannuation accounts for new employees who do not specify a fund;
• Schedule 2 amends the SGA Act and the Superannuation Industry (Supervision) Act 1993 (SIS Act) to require APRA to undertake annual performance tests for MySuper and other specified products; and
• Schedule 3 makes multiple amendments to the SIS Act in relation to the ‘best financial interests’ duty.