Birchstone Brief for the week ended 8 April 2022

ATO Updates

The ATO has issued the following class rulings:

  • CR 2022/34 – Australia and New Zealand Banking Group Ltd – ANZ Capital Notes 7;
  • CR 2022/35 – Urban Mobility Pty Ltd – Use of an electric bicycle by an employee; and
  • CR 2022/36 – Eftpos Payments Australia Ltd – Demutualisation.

ATO Guidance: Employee share schemes

The ATO has issued two Taxation Determinations relevant to employee share schemes (ESSs):

TD 2022/4, which finalises TD 2021/D5, sets out the Commissioner’s view of the applicable principles for working out whether:

  • an ESS’s disposal restrictions were ‘genuine disposal restrictions’; and
  • if they were, when a taxpayer is no longer genuinely restricted by them for the purposes of determining their deferred taxing point.

TD 2022/8, which finalises TD 2022/D2 (covered in the Birchstone Brief for the week ended 25 February), sets out the Commissioner’s views on the deductibility of expenses incurred by employer companies in establishing and administering ESSs (including the establishment and administration of employee share trusts).

State Taxes

Payroll Tax (WA): Hospitality business waiver extended

The WA Government has extended the COVID-19 payroll tax waiver for eligible hospitality businesses to 30 June 2022.

 

Cases

FCT v Carter [2022] HCA 10 Disclaimers

The High Court of Australia has allowed the Commissioner’s appeal from the decision of the Full Federal Court in Carter v FCT [2020] FCAFC 150. In that case, the Full Federal Court held that the beneficiaries of a discretionary trust had effectively disclaimed their entitlement to default trust distributions.

However, the High Court of Australia overturned this decision, ruling that disclaimers could not operate retrospectively in relation to amounts that the beneficiaries were made presently entitled to under section 97 of the Income Tax Assessment Act 1936 (Cth). Rather, the High Court found that a beneficiary’s present entitlement under section 97 is determined immediately prior to the end of the income year, meaning that a subsequent disclaimer in the following income year would be ineffective. 

 

Legislation

Treasury Laws Amendment (Allowing Commutation of Certain Income Streams) Regulations 2022Amending Regulations issued

The Government has issued amending Regulations affecting the rules surrounding the commutation of superannuation income streams. The changes ensure beneficiaries of non-capped defined benefit income streams that commenced on or after 1 July 2017 can rectify excess transfer balance cap amounts and comply with commutation authorities.

Duties Act amended

The WA Government has introduced a Bill:

  • amending the general rate of duty for non-residential property to align with the current concessional rate of duty for residential property;
  • changing the transfer duty concession for residential land and business property to ensure they continue to provide lower rates of duty on assets valued below $200,000;
  • removing duty on transactions for prospecting licenses unless the transaction also involves other dutiable property;
  • exempting eligible transfers of property made under family law court orders following a marriage or de facto relationship breakdown from transfer duty; and
  • abolishing duty on service demonstrator vehicles, cancelled vehicle purchases and vehicles returned for a full refund or replacement.

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