Birchstone Brief for the week ended 7 July 2023

Updated Section 100A Documentation Pack

We are excited to announce that our Section 100A Documentation Pack has been updated following the recent case law on section 100A and release of the final ATO guidance.

The Section 100A Documentation Pack is a practical resource designed to minimise the risk of section 100A applying by clearly documenting that the beneficiary is aware of their trust entitlement and has made an independent decision on what to do with it.

With the turn of the financial year, now is the perfect time to start using the Section 100A Documentation Pack with your trust clients. The pack includes a template letter for trustees to send to their beneficiaries, as well as a template letter for you to send to your trust clients explaining section 100A.

Click here to learn more and purchase the updated Section 100A Documentation Pack before the price increases.


ATO Updates

Division 7A Loan benchmark interest rate hike

The benchmark interest rate for the 2023-24 income year for Division 7A purposes is 8.27%. This constitutes a large increase from last income year’s rate of 4.77%.

PS LA 2003/7 updated

The ATO has updated PS LA 2003/7 to provide further clarity regarding the factors that should be taken into account by ATO staff when exercising the discretion to treat late objections as if they were lodged on time.

Class rulings and addendum issued

The ATO has issued:

  • CR 2023/35 – Tasmanian Irrigation Pty Ltd – Water entitlements roll-over;
  • CR 2023/36 – YMCA Canberra – Deductibility of donations under a payment direction deed; and
  • CR 2013/66A2 – Addendum to CR 2013/66 – Fringe benefits tax – Employers who use the Navman Wireless Australia system for car logbook and odometer records.



Ierna Beneficiary Pty Ltd v Commissioner of Taxation [2023] FCA 725 – Commissioner’s admission evidence of excessive assessments

The Federal Court has agreed to consent orders that a taxpayer’s appeal against amended assessments should be allowed, after the Commissioner conceded that the assessments made were, in fact, excessive. In making its decision, the Court noted that:

  • the Court could only exercise its powers to vary the assessments under section 14ZZP of the TAA 1953 where a taxpayer had discharged the burden of proof imposed by section 144ZO;
  • as a taxation appeal is a judicial proceeding, the burden imposed by section 144ZO can only be satisfied by admissible evidence; and
  • the Commissioner’s admission that the assessments were excessive was sufficient proof they were, to the extent of that admission, as a matter of fact excessive.

Aston v Commissioner of Taxation [2023] AATA 1848 – AAT refuses to allocate excess contributions to previous income year 

The AAT has upheld the Commissioner’s decision to refuse to reallocate excess concessional superannuation contributions to the 2018-19 financial year after the taxpayer made a contribution via direct debit on 26 June 2019 which was not received by his super fund until 1 July 2019. This was because the Tribunal considered the circumstances did not qualify as “special circumstances” under section 291-465 of the ITAA 1997. In making its decision, the AAT noted that:

  • the time it took the taxpayer’s super fund to process his contribution was not unusual; 
  • the resulting tax imposed (as the taxpayer had made a further concessional contribution in August 2019 and subsequently exceeded the concessional contributions cap in the 2019-20 year) was not harsh; and
  • when making concessional contributions close to the end of an income year, it is reasonable for taxpayers to confirm timely receipt, regardless of perceived payment timeframes.

Richmond v Commissioner of Taxation [2023] AATA 1915 – No deduction for conditional joint venture expenditure

The AAT has affirmed the Commissioner’s decision that a $1.5 million conditional payment made by a taxpayer to acquire a 75% interest in a joint venture was not tax deductible under either section 8-1 (as it constituted capital expenditure) or Division 40 (as it did not result in the taxpayer obtaining a mining, quarrying or prospecting right or mining, quarrying or prospecting information) of the ITAA 1997. 

Sexyworld (Aust) Pty Ltd v Commissioner of Taxation [2023] AATA 1919 – No CFB for adult shop companies 

The AAT has held that six related companies operating adult shop businesses were ineligible for the cash flow boost. This was because:

  • payments to the group’s employees were made by a payroll company rather than the entities themselves, and as such the entities had failed to establish that they had made payments to employees as required by section 5(1)(a)(i) of the CFB Act; and
  • the AAT considered that all but one of the companies had entered into a scheme with the dominant purpose of making themselves entitled to the cash flow boost, and as such had offended the anti-avoidance provisions of the CFB Act.  


The NSW Chief Commissioner of State Revenue has applied to the High Court for special leave to appeal against the NSW Court of Appeal’s decision in Chief Commissioner of State Revenue (NSW) v Shell Energy Operations No 2 Pty Ltd [2023] NSWCA 113 (covered in the Birchstone Brief for the week ended 2 June 2023).



Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023 (Cth) now law

The Bill (first covered in the Birchstone Brief for the week ended 31 March 2023) has received royal assent and is now law.

Draft legislation regarding tax incentives for small businesses that invest in energy-efficient assets

Treasury has released exposure draft legislation and explanatory materials for consultation regarding the small business energy incentive, which was announced as part of the 2023-24 Federal Budget (covered in the Birchstone Brief for the week ended 12 May 2023.

Rules made regarding Digital Games Tax Offset Certificates 

The Minister for Arts has issued the Income Tax Assessment (Digital Games Tax Offset) Rules 2023, which establish procedures for companies to apply for Digital Games Tax Offset (DGTO) certificates. The rules include guidelines for issuing certificates, assessing applications, and obtaining expert reports. The rules also establish and outline the role of the DGTO Advisory Board.



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