Birchstone Brief for the week ended 1 October 2021

ATO Update

Decision impact statement: Glencore

The ATO has released a decision impact statement following the Full Federal Court’s decision in FCT v Glencore Investment Pty Ltd [2020] FCAFC 187 (covered in the Birchstone Brief for the week ended 13 November 2020). In that case, the Full Federal Court largely found in favour of Glencore in relation to the transfer pricing arrangements with its Swiss-based trader parent.

PS LA 2021/D2 – Administrative penalties for electronic sales suppression tools

The ATO has released a draft Law Administration Practice Statement which provides guidance on the application and remission of administrative penalties for electronic sales suppression tools.


The ATO has issued the following rulings:

  • Class Ruling CR 2021/63 – Rox Resources Limited – Demerger of Cannon Resources Limited;
  • Class Ruling CR 2021/64 – Suncorp Group Limited – Suncorp Capital Notes 4;
  • Class Ruling CR 2021/65 – Westpac Banking Corporation – Westpac Capital Notes 8;
  • Class Ruling CR 2021/66 – Edith Cowan University – Early retirement scheme 2021; and
  • Product Ruling PR 2021/11 – Tax consequences for Australian policyholders of a Quilter executive investment bond.

State Taxes

NSW: Employer superannuation contributions

Revenue NSW has released Commissioner’s Practice Note CPN 021 to assist employers in determining their liability for payroll tax on superannuation contributions and the Commonwealth superannuation guarantee charge.


E Group Security Pty Ltd v Chief Commissioner of State Revenue (NSW) [2021] NSWSC 1190 –Security guard services arrangements not subject to payroll tax

The NSW Supreme Court has held a taxpayer company was not liable for payroll tax on wages paid to security guards whose services had been sub-contracted from third parties.

The taxpayer provided security services to clients (being its wholly-owned subsidiaries) using security guards which had been sub-contracted from third parties. After an audit, the Chief Commissioner of State Revenue determined the taxpayer was an employment agent and therefore liable to payroll tax for the 2016-2018 income years. The Commissioner disallowed the taxpayer’s objection and the taxpayer then applied for a review of the Commissioner’s decision.

The key issue was whether the taxpayer’s arrangements with its subsidiaries (or clients) were ‘employment agency contracts’ under section 37 of the Payroll Tax Act 2007 (NSW). The Court found that  the arrangements did not constitute employment agency contracts. The Court reasoned that the security guards could not be regarded as having been integrated into the client’s workforce. Further, the Court stated that the arrangement between the taxpayer and its subsidiaries was not a client arrangement, but merely the subsidiary providing services to the parent company.

 STNK v Commissioner of Taxation [2021] AATA 3399 – Exports of scrap gold bars were GST-free

The AAT has found a taxpayer did not make GST-free supplies of scrap gold to refiners but did make GST-free supplies when making export sales of scrap gold bars.

The taxpayer company purchased scrap gold to be refined into bullion for sale to refiners (first stage), as well as export sales of scrap gold bars (second stage). The taxpayer contended that it made GST-free supplies and creditable acquisitions for the first stage, and GST-free export sales for the second stage. The Commissioner took the view that none of the supplies were GST-free and applied penalties.

The AAT held that the taxpayer’s first stage supplies were not GST free, as the taxpayer had not proven the refiners were dealers in precious metals as required by section 38-385 of the GST Act. However, the AAT found the taxpayer did make GST-free supplies in the second stage as it had exported the scrap gold bars (irrespective of whether it had possession of the scrap gold first.


Exposure draft materials: Retirement income

The Treasury has released exposure draft materials that will introduce a retirement income covenant for superannuation trustees.

Exposure Draft Legislation

The Treasury has released exposure draft materials containing a number of proposed minor and technical amendments to Treasury portfolio laws.

Additional information exchange countries

Regulations have been made which add Armenia, Cabo Verde, Kenya, Mongolia, Montenegro and Oman to the list of information exchange countries for the purposes of section 12-385(4) of Schedule 1 to the Taxation Administration Act 1953 (Cth).


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