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PCG 2017/13 Updated: Division 7A UPEs under Sub-Trust Arrangements
The ATO has updated PCG 2017/13, which sets out the ATO’s compliance approach regarding the repayment of loans entered into under Option 1 (investing the funds representing the UPE on an interest only 7-year loan) or Option 2 (investing the funds representing the UPE on an interest only 10-year loan) of PS LA 2010/4.
PCG 2017/13 was previously limited in its application to sub-trust arrangements maturing in the 2017 to 2021 income years, and has now been updated to extend to eligible sub-trust arrangements arising on or before 30 June 2022. The Commissioner’s view in TD 2022/D1 is proposed to apply to trust entitlements arising on or after 1 July 2022.
Decision Impact Statement Issued: FCT v Carter [2022] HCA 10
The ATO has issued a decision impact statement on FCT v Carter [2022] HCA 10 (summarised in the Birchstone Brief for the week ended 8 April 2022). The Carter case considered whether a valid disclaimer operated retrospectively, such that section 97 of the Income Tax Assessment Act 1936 (Cth) does not apply. The High Court unanimously held that a valid disclaimer executed by a beneficiary after year end did not have the effect of retrospectively avoiding the application of section 97.
The ATO’s decision impact statement states that disclaimers do not disturb what would otherwise be the tax result. Beneficiaries who have an interest in trust income should take this into account if they are considering disclaiming their interest. The closing date for comments in 8 July 2022.
The ATO has withdrawn ATO ID 2010/85 which provided that a beneficiary who has validly disclaimed an entitlement to trust income is not presently entitled to a share of the income for the purposes of section 97.
Decision Impact Statement Updated: Greig v FCT [2020] FCAFC 25
The ATO has updated its decision impact statement on Greig v FCT [2020] FCAFC 25. The decision impact statement had stated that the ATO would review its existing public advice and guidance (relevantly, TR 92/3 and TR 92/4). The update provides that the decision is consistent with the ATO’s existing public advice and guidance.
Decision Impact Statement Issued: Collins atf The Collins Retirement Fund and FCT [2022] AATA 628
The ATO has issued a decision impact statement on Collins & Anor atf The Collins Retirement Fund and FCT [2022] AATA 628. The issue in this case was whether the sale of subdivided lots by a superannuation fund was to be disregarded from the GST turnover of the fund under section 118-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
The decision impact statement notes that this is the first time a case has considered the requirements of section 118-25 of the GST Act, and that the AAT’s interpretation of the provision are consistent with the Commissioner’s views in GSTR 2001/7. The closing date for comments in 8 July 2022.
PCG 2020/5 and LCR 2021/2 Extended: Non-arm’s length income rules for super funds
The ATO has extended its transitional compliance approach in PCG 2020/5 and LCR 2021/2 in relation to the non-arm’s length income (NALI) rules for super funds to 30 June 2023.
The updated PCG provides that the ATO will not apply compliance resources to determine whether the NALI provisions apply where a super fund incurs non-arm’s length expenditure in the 2019 to 2023 income years that has a sufficient nexus to all income derived by the fund. The updated LCR delays the commencement of the ATO’s compliance approach for determining whether expenses are not at arm’s length to 1 July 2023.
Class Rulings
The ATO has issued the following class rulings:
- CR 2022/50 – American Pacific Borates Limited – exchange of shares for shares in 5E Advanced Materials, Inc; and
- CR 2022/51 – American Pacific Borates Limited – exchange of options for options in 5E Advanced Materials, Inc.
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