Birchstone Brief for the week ended 3 February 2023

The Financial Adviser’s Toolbox

As a financial adviser, the tools in your toolbox are what allow you to provide value to your clients.

Sharpen your tools by joining Birchstone Tax Law next Wednesday, 15 February for a breakfast seminar at Frasers King’s Park as we run through some recent legal developments and strategies for your clients specifically for financial advisers.

The seminar will be accredited by the Financial Planning Association of Australia for 1 CPD hour.

Click the link below to find out more and to register.

Register for our in-person Financial Advisers Seminar


ATO Updates

Decision Impact Statement – Shell Energy Holdings case

The ATO has issued a Decision Impact Statement (DIS) regarding:

At issue was whether:

  • Shell had acquired mining, quarrying or prospecting rights (MQPR); and
  • the cost to acquire such rights was immediately deductible to it under section 40-80 of the ITAA 1997. 

The facts of the case were complex, as was the consideration of the relevant legal issues. Each decision was mostly unfavourable to the Commissioner, 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; and 
  • the High Court rejecting the special leave application on the basis that the case’s procedural history made it a distinctly inappropriate vehicle to consider the question of whether an interest in joint venture property arises merely from acquiring a participating interest. 

In the DIS, the Commissioner also confirms that TD 2019/1 will be withdrawn, and a number of other rulings updated, as a result of the decisions. 

TD 2019/1 withdrawn

Consistently with the above, TD 2019/1 has been withdrawn with effect from 2 February 2023. This Determination set out the Commissioner’s view regarding what constitutes ‘use’ (and potentially first use) of a MQPR that is a depreciating asset for the purposes of section 40-80(1) of the ITAA 1997. 

The reason for the withdrawal is that the Commissioner’s view in the Determination (that a MQPR is only ‘used’ for the purposes of section 40-80 if the holder does something that the MQPR permits or authorises) is inconsistent with the Full Federal Court’s decision reported at [2022] FCAFC 2. In that case, the Court held that:

  • the ‘first use’ of a depreciating asset to which section 40-80 can apply corresponds with its ‘start time’ within the meaning of section 40-60(2) (i.e. when a taxpayer first uses the asset, or has it installed ready for use, for any purpose); and
  • in practice, the ‘first use’ and ‘start time’ for a bundle of rights such as an MQPR corresponds with when the MQPR is held for use. 

In the withdrawal notice, the Commissioner confirmed that they consider the Full Federal Court’s decision provides certainty regarding what constitutes the ‘use’ of an MQPR. As such, no new ruling will be issued. 

Class ruling issued

The ATO has issued CR 2023/3 – EFTsure Pty Ltd – Employee share scheme – Minimum holding period and exchange of options. 



Exposure draft legislation: streamlining excise administration

Treasury has released exposure draft legislation and explanatory material regarding proposed changes to streamline the administration of fuel and alcohol excise. 


Birchstone Brief

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