Birchstone Brief for the week ended 25 February 2022

ATO Updates

Draft ATO Guidance: Div 7A – UPEs and amounts held on sub-trust

The ATO has released Draft Taxation Determination TD 2022/D1 which describes when a private company provides financial accommodation where it is made presently entitled to income of a trust and either:

  • that entitlement remains unpaid; or
  • the trustee sets aside an amount from the main trust fund and holds it on a new separate sub-trust for the exclusive benefit of the private company beneficiary.

Draft ATO Guidance: Expenses incurred in establishing an ESS

The ATO has issued Draft Taxation Determination TD 2022/D2 which sets out the Commissioner’s views on the deductibility of expenses incurred in establishing and administering an employee share scheme.

Draft ATO Guidance: Section 100A reimbursement agreements

The ATO has issued new draft guidance on section 100A reimbursement agreements. Draft Taxation Ruling TR 2022/D1 sets out the Commissioner’s views on the application of section 100A, including the ordinary family or commercial dealing exception. The ATO has also issued Draft Practical Compliance Guideline PCG 2022/D1 which sets out how the ATO differentiates risk for a range of trust arrangements to which s 100A could apply.

TA 2022/1  Parents benefitting from the trust entitlements of their children over 18 years of age

The ATO has issued a Taxpayer Alert which sets out that it is currently reviewing trust arrangements where parents receive the economic benefit of trust income appointed to their children who are over 18 years of age.

Rulings

The ATO has issued the following rulings:

  • CR 2022/13 – Paralympics Australia – Medal payments;
  • CR 2022/14 – Cardno Ltd – Return of capital and special dividend;
  • CR 2022/15 – BHP Group Ltd – Unification of the BHP Group dual listed company structure;
  • CR 2022/16 – BHP Group Plc – Exchange of BHP Group Plc shares for BHP Group Ltd shares;
  • CR 2022/17 – AusNet Services Ltd – Employee share scheme – shares disposed of under scheme of arrangement; and
  • PR 2022/1 – Tax consequences for Australian policyholders of a Kenforth international insurance policy.

State Taxes

Duties (Vic): Interposition of a unit trust between stapled security holders and stapled entities

The Victorian State Revenue Office has issued Revenue Ruling DA-047v3 which clarifies when the duty concession under Division 1B in Pt 2 of Ch 11 of the Duties Act 2000 (Vic) will apply to relevant acquisitions arising from the interposition of a unit trust between stapled security holders and the stapled entities.

Legislation

Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021  Bill receives assent

The Bill which amongst other things:

  • removes the $450 monthly minimum threshold for salary or wages to count towards the superannuation guarantee;
  • increases the maximum releasable amount for the First Home Super Saver Scheme to $50,000; and
  • reduces the eligibility age from 65 to 60 years for downsizer contributions,

received Royal Assent on 22 February and is now law.

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