Birchstone Brief for the week ended 16 September 2022

ATO Updates

 Safe harbour for utilisation of non-commercial losses

PCG 2022/1 provides a safe harbour allowing individuals who have incurred non-commercial losses in an income year due to special circumstances such as flooding, bushfires or the impacts of COVID-19 to utilise those losses in that income year as if the Commissioner had exercised his discretion pursuant to section 35-55(1)(a) of the ITAA 1997 if they satisfy certain criteria. The Guideline:

  • sets out the criteria that must be satisfied and provides examples;
  • is only relevant where an individual taxpayer does not satisfy any of the other conditions in Division 35 (such that they would be otherwise unable to utilise their non-commercial losses);
  • applies to the 2019-20, 2020-21, 2021-22 and 2022-23 income years; and
  • finalises PCG 2022/D2 (covered in the Birchstone Brief for the week ended 13 May 2022).

Ruling on the games and sports exemption updated

TR 2022/2 provides updated guidance to societies, associations or clubs seeking an income tax exemption under the games and sports exemption contained in item 9.1(c) of the table in section 50-45 of the ITAA 1997. At a high level, the Ruling provides that a club will qualify for the games and sports exemption where it:

  • is established for the main purpose of the encouragement of a game or sport;
  • is not carried on for the profit or gain of individual members (excluding communal membership benefits); and
  • meets other special conditions contained in section 50-70.

The Ruling finalises TR 2021/D6 and replaces TR 97/22 (which was withdrawn with effect from 7 October 2021).

Draft legislative determination for margin scheme valuations released

The ATO has released LI 2022/D14, which specifies the requirements that must be met for a valuation of real property to be an ‘approved valuation’ for the purposes of applying the margin scheme in Division 75 of the GST Act.

Draft compliance guideline on the application of GST to certain supplies by residential colleges

PCG 2022/D3 sets out the Commissioner’s proposed compliance approach for universities and residential colleges supplying accommodation, meals, tertiary residential college courses and religious services to resident students and claiming associated input tax credits. The guideline is intended to assist residential colleges to determine if such supplies satisfy section 38-250 of the GST Act and can therefore be treated as GST-free supplies.

Class rulings and addendum issued

The ATO has issued the following:

  • CR 2022/83 – Prospect Resources Ltd — Return of capital and special dividend
  • CR 2022/84 – SGH Australia Plus — Scrip for scrip roll-over; and
  • CR 2022/14A1 – Addendum to CR 2022/14 – Cardno Limited – Return of capital and special dividend.



Draft legislation to reduce FBT compliance costs released 

Treasury has released exposure draft legislation intended to reduce FBT record keeping compliance costs for employers. If enacted, the legislation will give the Commissioner the power to modify (by legislative instrument) the existing FBT record keeping requirements to allow employers to rely on existing corporate records when finalising their FBT returns where the Commissioner considers those records to be adequate. Exposure draft legislative instruments dealing with travel diaries and relocation transport expense payments were also released for public comment.

Legislative instrument exempting certain entities from third party reporting released

A Deputy Commissioner of Taxation has issued the Taxation Administration Excluded Classes of Transactions and Entities for Third Party Reports on Shares and Units Determination 2022, which relieves certain entities from the obligation to provide information to the ATO under the third party reporting regime contained in the TAA 1953 in relation to certain specified transactions.

Determination setting the road user charge for taxable fuels issued

The Minister for Infrastructure, Transport and Regional Development has issued the Fuel Tax (Road User Charge) Determination 2022. The Determination:

  • revokes all previous determinations of the rate of road user charge; and
  • sets the rate of road user charge for taxable fuels for which duty is payable to $0.272 per litre or $0.363 per kilogram.

Draft legislation to deny franking credits where distribution funded by particular capital raising activities

Treasury has released exposure draft legislation containing a proposed integrity measure (originally announced as part of the 2016-17 Mid-Year Economic and Fiscal Outlook) to deny franking credits where a distribution to shareholders is funded by certain capital raising activities. 



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