Birchstone Brief for the week ended 10 March 2023

ATO Updates

Class ruling issued

The ATO has issued CR 2023/10 – Xero Ltd – Employee share scheme – Restricted Stock Unit and Option Plan. 

Fact Sheet on NSW Point to Point FAS updated

The ATO has updated its Fact Sheet on the tax treatment of payments provided to eligible taxi licence holders under the NSW Point to Point Financial Assistance Scheme (FAS) to confirm that:

• FAS payments are not ordinary income (as they are made in consideration for cancellation of a taxi licence and compensate for the associated loss of value); and 
• FAS payments should therefore be included in the calculation of the capital gain or loss that is made by a licence holder taxpayer on cancellation of the relevant taxi licence. 

Cases

Guardian case – no special leave application made

It appears that neither the taxpayer nor the Commissioner have applied to the High Court of Australia for special leave to appeal the Full Federal Court’s decision in FCT v Guardian AIT Pty Ltd ATF Australian Investment Trust [2023] FCAFC 3 (covered in the Birchstone Brief for the week ended 27 January 2023) within the statutory time limit. As such, unless an out of time application is made, it appears the Full Court’s decision (in which the Commissioner failed in relation to section 100A but succeeded on Part IVA grounds) will stand.

Hyder v FCT [2023] FCAFC 29 – Full Federal Court confirms Commissioner’s power to tax multiple taxpayers on same income

The Commissioner has been successful before the Full Federal Court, with the Court dismissing the taxpayers’ appeal against Greenwood J’s decision reported at [2022] FCA 264 and holding that: 

• as established by authority, the Commissioner can lawfully issue assessments to more than one taxpayer in respect of income from the same source; 
• it was within the Commissioner’s power of general administration (and incidental to his power to sue pursuant to section 255-5(2) of Schedule 1 to the TAA 1953) to give an undertaking to defer recovery action against one of the relevant taxpayers; and 
• the Commissioner was not required to give credit for tax paid by another taxpayer in respect of an alternative assessment when calculating GIC. 

Legislation

Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 (Cth) passes House of Representatives & referred to Senate Committee

The Bill (first covered in the Birchstone Brief for the week ended 17 February 2023) has been:

• passed by the House of Representatives; and
• referred to the Senate Economics Legislation Committee for inquiry and report by 26 May 2023. 

If enacted into law, the Bill will:

• implement certain recommendations of the Independent Review of the Tax Practitioners Board; 
• align the tax treatment of off-market and on-market share buy-backs undertaken by listed public companies and amend the income tax law regarding selective share cancellations to ensure alignment of tax treatment across the capital management activities of listed public companies; and
• prevent companies from franking certain distributions funded by capital raisings. 

Exposure Draft Legislation & Commentary – Concessional Treatment of ACCUs for Primary Producers

Treasury has released exposure draft legislation and commentary regarding tax changes to provide concessional tax treatment for primary producers that sell Australian Carbon Credit Units (ACCUs). The proposed changes were originally announced by the former government in its March 2022-23 Budget and, if enacted, will:

• allow eligible primary producers to treat the net proceeds from the sale of ACCUs first held on or after 1 July 2022 as primary production income for the purposes of the Farm Management Deposit scheme and income tax averaging; and
• change the taxing point for ACCUs held by eligible primary producers to the point of sale (rather than tax applying based on changes in the value of ACCUs each income year).