Birchstone Brief for the week ended 12 November 2021

ATO Update

TD 2021/8 – Value of goods taken from stock for private use

The Commissioner has updated the Tax Determination which sets out the amounts that the Commissioner will accept as estimates of the value of goods taken from trading stock for private use by taxpayers in certain industries.

PCG 2021/7 – Transfer pricing record-keeping options

The Commissioner has updated the Practical Compliance Guideline which outlines the simplified transfer pricing record-keeping options to reflect the new minimum interest rate for low-level outbound loans and the new maximum interest rate for low-level inbound loans in 2022 (which for both is now 1.83%).

Class Ruling

The ATO has issued Class Ruling CR 2021/73 – Environment Protection Authority Victoria – Early retirement scheme 2021-2022.

Cases

Buddhist Society of Western Australia v FCT [2021] FCA 1363 – DGR status

The Federal Court has set aside the Commissioner’s objection decision in relation to the revocation of the Buddhist Society of Western Australia’s deductible gift recipient (DGR) status.

The taxpayer operated several Buddhist centres in Perth, including a monastery and a meditation retreat. The taxpayer had been endorsed as a DGR for the funds associated with these separate centres. In 2019, the Commissioner revoked the DGR endorsement of one of the entities (the Dhammaloka Buddhist Centre Building Fund) on the basis that it did not satisfy the requirements of Item 2.1.10 of the table in s 30-25(1) of the Income Tax Assessment Act 1997 (Cth) – which related to the meaning of ‘school’ for DGR purposes. In responding to the objection against the Commissioner revoking the DGR status of the Dhammaloka Buddhist Centre Building Fund, the Commissioner applied Taxation Ruling TR 2013/2, reasoning that the centre was not a school within the ordinary meaning of that word as it was not a place with the primary function of providing ‘regular, ongoing and systemic instruction’ in a course of non-recreational education.

The Federal Court set aside the objection decision and remitted it to the Commissioner for determination pursuant to section 16(1)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The Federal Court reasoned that TR 2013/2 (which the Commissioner had relied upon in the objection decision) superimposed additional requirements on the ordinary meaning of the term ‘school’ that didn’t appear in case law. Most notably, the case law did not provide that the nature of the instruction provided must be ‘regular, ongoing and systematic’ , which was one of the Commissioner’s key reasons for disallowing the taxpayer’s objection.

Legislation

Corporations Amendment (Portfolio Holdings Disclosure) Regulations 2021 – Disclosure requirements

Regulations have been made which set out how superannuation funds that are required to disclose information about their investments under the portfolio holdings disclosure regime must organise this information.

Australian Charities and Not-for-profits Commission Amendment (2021 Measures No. 3) Regulations 2021 – ACNC governance standard

Regulations have been made to clarify the new ACNC governance standard 3 that prohibits registered charities from engaging in or actively promoting certain of unlawful activity.

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