Birchstone Brief for the week ended 17 December 2021

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 Update

ATO Guidance: Allocation of professional firm profits

The ATO has issued Practical Compliance Guideline PCG 2021/4 which finalises the ATO’s compliance approach to the allocation of profits or income from professional firms in the assessable income of the individual professional practitioner, as first set out in Draft Practical Compliance Guideline PCG 2021/D2 (covered in the Birchstone Brief for the week ended 5 March 2021).

Decision Impact Statement: Addy

The ATO has issued a decision impact statement on the decision of the High Court in Addy v FCT [2021] HCA 34 (covered in the Birchstone Brief for the week ended 29 October 2021). In that case, the High Court held that the application of the ‘backpacker tax’ was contrary to Australia’s obligations under the non-discrimination clause in the DTA between Australia and the UK. The decision impact statement sets out that the decision in Addy will only be relevant to working holiday visa holders that are Australian tax residents and nationals of certain countries (being countries that have a non-discrimination clause in their DTA with Australia), including:

  • Germany;
  • the UK; and
  • Japan.

ATO Guidance: Imported hybrid mismatch rule

The ATO has issued PCG 2021/5 which finalises the Commissioner’s guidance on how he will assess the relative levels of tax compliance risk associated with the hybrid mismatches addressed by Subdivision 832-H of the Income Tax Assessment Act 1997 (Cth).

Draft ATO Guidance: Superannuation

The ATO has issued Draft Practice Statement PS LA 2021/D3 which sets out when and how the Commissioner will apply the discretion in section 304-10 of the Income Tax Assessment 1997 (Cth) to exclude a superannuation benefit from a taxpayer’s assessable income where they have received the benefit in breach of legislative requirements.

The ATO has also issued Draft Taxation Determination TD 2021/D6 which clarifies the income tax treatment of a superannuation benefit where the Commissioner has exercised the discretion in section 304-10.

Class Rulings

The ATO has issued the following class rulings:

  • CR 2021/97 – Wingate Group Holdings Pty. Ltd – Demerger of Now Finance Group Holdings Pty Ltd;
  • CR 2021/98 – Archer Materials Limited – Return of capital by way of in specie distribution; and
  • CR 2021/99 – Vortiv Limited – Return of capital.

Legislation

Territories Stolen Generations Redress Scheme (Consequential Amendments) Bill 2021 (Cth) – Bill receives assent

The Bill which exempts redress payments made to individuals under the Territories Stolen Generations Redress Scheme from income tax has received assent and is now law.

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