Birchstone Brief for the week ended 2 June 2023

ATO Updates

Addendum to TD 2012/22 issued

The ATO has issued TD 2012/22A1, which amends TD 2012/22 from 31 May 2022. TD 2012/22 deals with how to work out a beneficiary’s share of the net income of a trust estate for the purposes of section 97(1)(a) of the ITAA 1936. The addendum updates the Determination to take account of the decision in Lewski v FCT [2017] FCAFC 145, which confirmed that where a trustee makes an ‘income variation resolution’, the determination of a beneficiary’s share of the net income of a trust estate for the purposes of section 97(1)(a) will depend on the facts and circumstances of the case. The addendum also makes a minor clarification to Example 2 and removes Examples 6 and 7 from the Determination. 

Class Ruling issued

The ATO has issued CR 2023/29 – ASC Pty Ltd – Early retirement scheme (operational employees) 2023. 


State Taxes

Revenue NSW identifies additional countries no longer subject to foreign surcharges and extends refund period

Revenue NSW has announced that it has identified India, Japan, Norway and Switzerland as additional countries whose international tax treaties with the Commonwealth Government may be inconsistent with the imposition of surcharge purchaser duty and surcharge land tax. 

As such, individuals that are purchasing residential-related property or land in their own capacity who are citizens of one of the relevant nations will no longer be required to pay surcharge purchaser duty or surcharge land tax. The liability of non-individuals, such as corporations, trusts or partnerships who are associated with one of these nations, may also be affected by the provisions of the relevant tax treaties. 

Revenue NSW has also extended the refund period, such that refunds may now be available for purchasers/transferees and landowners associated with the relevant nations who paid surcharge purchaser duty or surcharge land tax on or after 1 January 2021. 

Duties (NSW): Ruling on duties exemption for familial transfers of primary production land updated

Revenue NSW has released DUT 050v2, which provides an overview of the operation of section 274 of the Duties Act 1997 (NSW), as amended by the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 (NSW). The amendments had the effect of expanding the operation of the exemption from duty in section 274 from 19 May 2022 to transfers or leases of primary production land to companies and trusts controlled by relevant family members (as opposed to just those family members personally, as had been the case before the amendments). 


Chief Commissioner of State Revenue (NSW) v Shell Energy Operations No 2 Pty Ltd [2023] NSWCA 113 – NSW Court of Appeal holds that power stations were ‘goods’ 

The NSW Court of Appeal has held that interests in power stations which were severed from the land on which they stood were ‘goods’ for the purposes of the landholder duty provisions in Chapter 4 of the Duties Act 1997 (NSW).

The reason for this was that the ordinary understanding of the notion of ‘goods’ at general law, which the relevant statutory usage of the word encompassed, included former fixtures which had been legally severed from the land. As such, the items which made up the power stations became ‘goods’ within the meaning of Chapter 4 when they were legally severed from the land pursuant to two statutory vesting orders, there being nothing in those orders which had the effect of changing the legal character of those items to become innominate sui generis property interests. Further, even if the vesting orders had had such an effect, the Court found that such a property interest would still fall within the concept of goods for the purposes of Chapter 4. 

In so doing, the Court overturned the decision of Ward CJ reported at [2022] NSWSC 1074 (covered in the Birchstone Brief for the week ended 19 August 2022). 

Integrated Trolley Management Pty Ltd v Chief Commissioner of State Revenue (NSW) [2023] NSWSC 557 – NSW Supreme Court finds trolley collection services not procured under employment agency contract

The NSW Supreme Court has held that trolley collection services provided to three major supermarkets pursuant to a subcontracting arrangement were not procured under employment agency contracts within the meaning of section 37(1) of the Payroll Tax Act 2007 (NSW).

The taxpayer operated a trolley collection business and had contracts with three major supermarket operators. However, they did not employ people to collect the trolleys, but instead engaged subcontractors to perform the specified trolley collection services on its behalf. These subcontractors were a mixture of sole traders, partnerships, family trusts and small proprietary companies, who themselves may have engaged employees or other agents to actually perform the trolley collection work. 

Contrary to the Commissioner’s contentions that the contracts were employment agency contracts as the subcontractors performed work and had duties that would otherwise be carried out by employees of the supermarkets, the Supreme Court found that the subcontractors were independent contractors operating their own businesses who were retained by the supermarkets through an intermediary, and as such could not be seen as undertaking the relevant work ‘in and for’ the businesses of the supermarkets. Significant factors leading to this conclusion included that the trolley collection services provided were a defined and discrete task performed outside the supermarket and requiring no coordination with or supervision from the supermarket staff, and that the use of trolley collection contractors was common in the supermarket industry. 

FCT v Wood [2023] FCA 574 – Federal Court affirms deductibility of settlement fee

The Federal Court has affirmed a decision of the AAT, reported at [2022] AATA 4147 (covered in the Birchstone Brief for the week ended 16 December 2022), that the relevant taxpayer was permitted to deduct a payment made to settle litigation pursuant to section 8-1 of the ITAA 1997. 

Matthews v FCT [2023] AATA 1329 – AAT affirms Commissioner’s decision to deny substantial deductions 

The AAT has affirmed an objection decision in which the Commissioner denied $148,666 in deductions claimed by an individual taxpayer. This was because, due to a lack of evidence from the taxpayer, the AAT was not convinced that the taxpayer was carrying on a business or required to use his own vehicle to produce assessable income. The taxpayer had also failed to properly substantiate the expenses related to his car using the logbook method, and did not produce any evidence to show that other claimed expenses were not private or capital in nature. 



Taxation and Miscellaneous Amendments Bill 2023 (Tas) passes House of Assembly

Bill has passed the Tasmanian House of Assembly which, consistently with the announcements made in the 2023-24 Tasmanian Budget (covered in the Birchstone Brief for the week ended 26 May 2023),  proposes amendments to:

  • the Duties Act 2001 (Tas) to extend the vehicle licence duty exemption on the purchase of new electric and hydrogen fuel cell vehicles to 31 December 2023, where the purchase contract was entered into prior to 25 May 2023; 
  • the First Home Owner Grant Act 2000 (Tas) to maintain the First Home Owner Grant at $30,000 from 1 July 2023 until 30 June 2023.

The Bill is currently before the Legislative Council. 

First Home Buyer Legislation Amendment Bill 2023 (NSW) awaits royal assent

Bill has been passed by both Houses of the NSW Parliament and now awaits royal assent. If enacted into law, the Bill will amend:

  • the Property Tax (First Home Buyer Choice) Act 2022 (NSW) to effectively repeal the former NSW Government’s First Home Buyer Choice Scheme (first covered in the Birchstone Brief for the week ended 24 June 2022);
  • the Duties Act 1997 (NSW) to require a person to reside in a home as their principal place of residence for a continuous period of at least 12 months to be eligible for a duty exemption or concession, and increase the maximum value up to which a property can be eligible for the First Home Buyers Assistance Scheme; and
  • the First Home Owner Grant and Shared Equity Act 2000 (NSW) to require first home buyers to reside in a home as their principal place of residence for a continuous period of at least 12 months in order to be eligible for a First Home Owner Grant.

State Taxation Acts Amendment Bill 2023 (Vic) before Legislative Council

Bill containing proposed amendments to implement various tax-related measures announced in the 2023-24 Victorian Budget (covered in the Birchstone Brief for the week ended 26 May 2023) has passed through the Victorian Legislative Assembly and is currently being considered by the Legislative Council. 

Fuel Tax (Road User Charge) Determination 2023 registered

Determination has been registered on the Federal Register of Legislation which sets out the new rates of the road user charge applicable for fuel tax purposes from 1 July 2023. 



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