Merry Christmas and Happy New Year
This is the final edition of the Birchstone Brief for 2022.
The team at Birchstone Tax Law wish you a Merry Christmas and a Happy New Year! We hope you have a safe, relaxing and well deserved break.
Thank you for taking your time to read the Birchstone Brief each week, and we look forward to being back in your inboxes in 2023.
Draft guidance on employee/contractor distinction
The ATO has released a draft ruling and practical compliance guideline regarding the employee/contractor distinction.
TR 2022/D3 explains the Commissioner’s view regarding when an individual is an ’employee’ of an entity within the meaning of section 12-35 of Schedule 1 to the TAA 1953 for PAYG withholding purposes. It replaces TR 2005/16 (which has been withdrawn with effect from 15 December 2022), and is proposed to have retrospective application once finalised. As the term ’employee’ is not defined in section 12-35 (or any other tax or superannuation legislation), the draft ruling sets out the Commissioner’s view of the meaning of that term at common law. Interestingly, although the common law meaning of ’employee’ is also relevant for the purposes of section 12(1) of the SGAA 1992, TR 2022/D3 is expressly stated not to be binding on the Commissioner in relation to that provision.
PCG 2022/D5 outlines the Commissioner’s compliance approach for businesses that engage workers and classify them as employees or independent contractors. The draft PCG:
Notably, paragraph  of the draft PCG states that while SGR 2005/1 is being reviewed in light of Personnel Contracting and Jamsek, it still represents the Commissioner’s published view on the extended definition of an employee for superannuation guarantee charge purposes until it is updated.
Guidance regarding GST and certain supplies made by residential colleges finalised
PCG 2022/3 finalises PCG 2022/D3 (first discussed in the Birchstone Brief for the week ended 16 September 2022) and sets out the Commissioner’s compliance approach for universities and residential colleges that are supplying accommodation, meals, tertiary residential college courses and religious services to resident students and claiming associated input tax credits. The purpose of the guideline is to assist these taxpayers to determine if such supplies can be treated as GST-free.
Class and product rulings issued
The ATO has issued:
First Home Buyer Choice (NSW): Guidance released
Revenue NSW has issued the First Home Buyer Choice Guide, which contains an overview of the new opt in annual property tax announced in the 2022-23 NSW State Budget (covered in the Birchstone Brief for the week ended 24 June 2022) and enacted by the Property Tax (First Home Buyer Choice) Act 2022 (NSW).
Land tax (NSW): Reductions or exemptions for boarding houses and low-cost accommodation
Revenue NSW has released:
- LT-113, which provides that where land is used primarily as a boarding house in accordance with the guidelines contained in the ruling, an exemption from land tax or a pro rata reduction in the taxable land value of the land will be available; and
- LT-114, which provides that land situated within a 5 kilometre radius of 1 Martin Place, Sydney used to provide low-cost rental accommodation in accordance with the guidelines contained in the ruling is exempt from land tax.
IGTO releases update on ATO administration of deceased estates
The Inspector-General of Taxation and Taxation Ombudsman (IGTO) has released an update regarding the progress, status and expected due dates of the ATO’s implementation of its 2020 report Death and Taxes – an Investigation into ATO systems and processes for dealing with deceased estates. Various recommendations have already been adopted, and expected future changes include allowing registered tax practitioners who have been appointed by legal personal representatives to access any correspondence sent to a deceased taxpayer’s MyGov that is not otherwise accessible through online services for agents.
XPTC v FCT  AATA 4147 – Deduction allowed for settlement but not associated legal costs
A taxpayer has received a mostly favourable outcome before the AAT, with the Tribunal holding that:
- contrary to the Commissioner’s position, his payment of $200k in settlement of court proceedings was deductible under section 8-1 of the ITAA 1997; and
- allegedly associated legal costs totaling approximately $73k were not deductible, with the AAT finding it was impossible to quantify what proportion of the legal fees related to the taxpayer’s income-earning activities on the available evidence.
Various tax measures now law
The following Bills received royal assent on 12 December and are now law:
- the Treasury Laws Amendment (Electric Car Discount) Bill 2022 (Cth) (first covered in the Birchstone Brief for the week ended 29 July 2022);
- the Treasury Laws Amendment (2022 Measures No 2) Bill 2022 (Cth) (first covered in the Birchstone Brief for the week ended 5 August 2022); and
- the Crimes Amendment (Penalty Unit) Bill 2022 (Cth) (first covered in the Birchstone Brief for the week ended 11 November 2022).
Exposure draft legislation and explanatory materials: income tax exemption for wholly-owned Australian subsidiaries of the Future Fund
Treasury has released exposure draft legislation and explanatory materials to provide a corporate income tax exemption for wholly-owned Australian incorporated subsidiaries of the Future Fund Board of Guardians.