Birchstone Brief for the week ended 9 September 2022

ATO Updates

Settlement monies from the Robodebt class action not taxable

The ATO has announced that eligible participants of the Robodebt class action receiving a settlement payment from Services Australia do not need to declare the payment in their tax return nor pay income tax on it. 

Draft legislative instrument to exempt certain transactions from third party reporting

A Deputy Commissioner of Taxation has released LI 2022/D13, a draft legislative instrument exempting administrators of electronic payment systems from having to include certain classes of transactions for third party reporting purposes under the TAA 1953. The instrument is intended to apply with retrospective effect from 1 July 2022 and repeal and replace Instrument F2021L00278 Classes of Electronic Payment System Transactions Exempt from Being Reported in Third Party Reports Determination 2021. 

Class rulings and erratum issued

The ATO has issued the following:

  • CR 2022/80 – Metals X Ltd – Return of capital by distribution of shares in NICO Resources Ltd; 
  • CR 2022/81 – Victoria Police – Early retirement scheme 2022-2023; 
  • CR 2022/82 – Australian Construction Industry Redundancy Trust – Employer contributions; and
  • CR 2022/35ER1 – Erratum to CR 2022/35 – Urban Mobility Pty Ltd – Use of an electric bicycle by an employee. 

State Taxes

Land Tax (Vic): Guidelines for rooming house exemption updated

The Victorian State Revenue Office has issued updated guidelines on the land tax exemption for rooming houses.  The exemption provides that land tax will not be levied on land if the Commissioner of State Revenue determines that it is used and occupied:

  • as a rooming house (within the meaning of the Residential Tenancies Act 1997 (Vic)) registered under Part 6 of the Public Health and Wellbeing Act 2008 (Vic); and
  • primarily as low-cost accommodation for people with low incomes. 

The updated guidelines:

  • set out the requirements that must be met for the exemption to be granted and discuss them in more detail; and
  • will take effect from the 2023 land tax year (see the archived guidelines for guidance relevant to prior land tax years). 

Cases

Robis Consulting Pty Ltd v FCT [2022] AATA 2832 – AAT finds reinvigorated company entitled to CFB

In another cash flow boost (CFB) case, the AAT has ruled that a company which was effectively dormant from 2017 to the second half of 2019 and paid no directors fees until March 2020 was entitled to the CFB. Despite the Commissioner’s contentions to the contrary, the AAT was satisfied that:

  • the taxpayer had paid wages in March 2020 (albeit constructively by declaring earlier drawings to be director’s fees in March 2020); and
  • neither the taxpayer nor any associate or agent of the taxpayer had entered into or carried out a scheme or part of a scheme for the sole or dominant purpose of making the taxpayer entitled to the CFB or increasing such an entitlement.

JHKW v FCT [2022] AATA 2875 – Delay causes taxpayer to lose out on input tax credits

The AAT has upheld an objection decision by the Commissioner to disallow claims for input tax credits in business activity statements lodged outside the four year statutory time limit set out in section 93-5 of the GST Act. The AAT held that: 

  • the GST Act clearly provides that an entitlement to input tax credits ceases if they are not claimed within four years of the day on which the relevant BAS should have been given to the Commissioner; and
  • as there was no evidence that the Commissioner had granted an extension of time to the taxpayer, there was no room for the operation of a discretion in the circumstances of the case.
 

Appeals

The High Court has dismissed the Commissioner’s application for special leave against the decision of the Full Federal Court in FCT v Shell Energy Holdings Australia Ltd [2022] FCAFC 2. In the Full Federal Court decision, the ATO lost its appeal – with the Full Federal Court upholding the first instance decision that Shell was entitled to an outright deduction under section 40-80 of the ITAA 1997 for the cost of acquiring another oil company’s interests in an offshore exploration project

 

Legislation

Family Court Amendment Bill 2022 (WA) – Bill providing for separating couples to split super now law 

The Bill (covered in the Birchstone Brief for the week ended 19 August 2022) to allow de facto couples in WA to split their superannuation in the event of a relationship breakdown has received royal assent and is now law. Subject to commencement of the Act and the associated Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020 (Cth), the reforms will mean that West Australians in de facto relationships are no longer disadvantaged when it comes to splitting superannuation assets following separation, thereby bringing WA into line with all other Australian jurisdictions. 

Treasury Laws Amendment (Electric Car Discount) Bill 2022 (Cth) – Senate committee recommends prompt passage through Parliament

The Senate’s Economic Legislation Committee has recommended that the Bill (covered in the Birchstone Brief for the week ended 29 July 2022) providing an FBT exemption for zero or low emissions vehicles should be passed through Parliament quickly in order to make such vehicles more affordable and increase their uptake.

Treasury Laws Amendment (2022 Measures No 3) Bill 2022 (Cth) & Income Tax Amendment (Labour Mobility Program) Bill 2022 (Cth) – Bills introduced to effect tax treatment of certain visa holders

The Government has introduced two Bills which will together introduce a final withholding tax rate of 15% applicable to salary, wages, commission, bonuses or allowances paid by Approved Employers under the Pacific Australia Labour Mobility Scheme to foreign resident holders of a Temporary Work (International Relations) visa. The reduction to a flat final withholding rate of 15% is designed to ensure that such workers pay tax on program income at a rate consistent with similar migration programs. 

The Treasury Laws Amendment (2022 Measures No 3) Bill 2022 (Cth) also contains amendments relating to:

  • data sharing of protected information under the TAA 1953 between government agencies; 
  • an alternative annual performance test for faith-based superannuation products; and
  • the extension of a temporary mechanism allowing responsible Ministers to make a determination adjusting arrangements for meeting information and documentary requirements under Commonwealth legislation until the end of 31 December 2023. 

Draft legislation to prevent crypto assets from being treated as foreign currency released

The Treasury has released draft legislation to ensure that crypto assets are not treated as a foreign currency for Australian income tax purposes. The legislation is necessary to resolve uncertainty following the Government of El Salvador’s decision to adopt Bitcoin as legal tender. If enacted, the legislation will:

  • amend the definition of digital currency in the GST Act; and
  • exclude digital currency as defined in the GST Act from the definition of foreign currency in the ITAA 1997. 
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