Stapled group reporting concerns
The ATO has announced its concerns that some entities with transitional managed investment trust (MIT) cross staple arrangement income are not reporting correctly, having identified some instances of non-disclosure and non-reconciliation of amounts disclosed in trust income tax returns, annual investment income reports and distribution statements for non-concessional MIT income (NCMI). The ATO recommends relevant taxpayers and custodians:
- have their NCMI reporting mechanisms reviewed by their service providers and tax agents;
- take steps to ensure reporting is in place for future lodgments (if they already lodged their trust tax returns and did not complete the MIT and NCMI related disclosures); and
- consider revising past disclosures.
Decision Impact Statement: Aurizon Holdings Ltd v FCT  FCA 368
The ATO has issued a decision impact statement regarding the Federal Court’s decision in the Aurizon Holdings case.
The primary issue in that case was whether a ‘State Contribution’ paid to Aurizon Holdings by the State of Queensland was ‘share capital’ for the purposes of section 957-300 of the ITAA 1997. The Commissioner contended that it was not share capital but a different form of capital (as it was not made in exchange for an issue of shares), but the court disagreed and held it was a contribution of share capital in the specific facts of the case. The court also granted declaratory relief to the taxpayer in that case, despite the Commissioner’s contentions that it should not do so (on the basis that the private ruling process provided an alternative and more appropriate remedy).
The Commissioner considers that the decision has very limited wider application and turned on its own facts. Given the unusual circumstances of the case, the Commissioner’s view is that:
- the decision affirms the pre-existing view of what is generally to be treated as share capital; and
- the approach taken in the case as to what constitutes share capital will only be relevant in the unusual circumstance where there is clear contemporaneous evidence that the objective intention was that the relevant amount was always meant to be a contribution to share capital.
Regarding the subsidiary issue of declaratory relief, while he acknowledges that the case was unusual, the Commissioner nevertheless considers that the private binding ruling process is capable of dealing with complicated factual circumstances.
The Commissioner does not intend to alter any ATO precedential documents or practice statements as a result of the decision.
ATO contact imminent for SMSF trustees who have ignored final warnings to lodge
The ATO has announced that it has identified hundreds of SMSF trustees who have failed to lodge their SMSF annual return (SAR) following final warning letters issued in April and June this year. These trustees should expect contact from the ATO in due course and the commencement of compliance action where appropriate. Moreover, the ATO advises any trustees who have received correspondence reminding them to lodge to file any outstanding returns as soon as possible.
Class Rulings Issued
The ATO has issued the following class ruling:
- CR 2022/77 – DGO Gold Ltd — Scrip for scrip roll-over.