Birchstone Brief for the week ended 8 September 2023

ATO Updates

Guidance regarding exempt foreign employment income updated

The ATO has issued:

• TD 2005/14A1 – Addendum to TD 2005/14; 
• TD 2005/15A1 – Addendum to TD 2005/15; and
• TR 2013/7A2 – Addendum to TR 2013/7. 

The purpose of the addendums in all cases is to modernise the relevant guidance and, in the case of:

• TD 2005/15, to take account of the decision in Tanddo v FCT [2022] AATA 4143; and 
• TR 2013/7, to confirm that a member of the Australian Border Force is not considered a member of a disciplined force for the purposes of section 23AG(1aa)(d) of the ITAA 1936, as held in Willard v FCT [2022] AATA 3723 (covered in the Birchstone Brief for the week ending 11 November 2022). 

TD 2023/D2 finalised

TD 2023/D2 (covered in the Birchstone Brief for the week ending 30 June 2023), which sets out guidance regarding whether the Commissioner’s discretion in section 328-125(6) of the ITAA 1997 to treat an entity as not being in ‘control’ of another (for the purposes of determining whether the two entities are ‘connected with’ each other) should be exercised in certain scenarios, has been finalised as TD 2023/5. 

Employee work expenses guidance updated

 The ATO has updated its ‘Employees guide for work expenses‘ to:

• include up-to-date information regarding deductions for working from home expenses; and 
• remove the content on the $250 reduction to self-education expenses following the repeal of section 82A of the ITAA 1936. 

Rulings, addenda and erratum issued

The ATO has issued:

• CR 2023/48 – Abacus Property Group – De-stapling and re-stapling as Abacus Group and Abacus Storage King;
• CR 2023/49 – Navman Wireless Australia Pty Ltd – Use of FTC Manager for fuel tax credits;
• PR 2023/17 – Fuel tax: Navman Wireless Australia Pty Ltd and FTA Manager – FTC Self Claim level clients;
• CR 2023/20A1 – Addenum to CR 2023/20 – Navman Wireless Australia Pty Ltd – Use of FTC Manager for fuel tax credits;
• PR 2023/4A1 – Addendum to PR 2023/4 – Fuel tax: Navman Wireless Australia Pty Ltd and FTC Manager – FTC Self Claim level clients; and 
• CR 2023/46E1 – Erratum to CR 2023/46 – MetalsTech Limited – Return of capital by way of in specie distribution. 

Cases

Nicholls v FCT [2023] AATA 2772 – Deduction for personal super contributions denied as notice requirement not met

The AAT has denied $6,000 in personal superannuation contributions claimed by a taxpayer in the 2020-2021 income year, on the basis that the taxpayer had not complied with the notice requirements in section 290-170 of the ITAA 1997 before lodging his income tax return. While the case was a straightforward one, it demonstrates the strictness of the notice requirements that must be complied with to claim a deduction for personal superannuation contributions. 

Rusanova v FCT [2023] AATA 2782 – Lack of evidence lets default assessments stand

The AAT has found against the taxpayers in another default assessment case due to a lack of evidence. This time, it was the taxpayers’ (who were a married couple) failure to adduce any evidence substantiating their claims that amounts deposited into their bank accounts were gifts or loans that led to the Tribunal’s conclusion that neither of them had discharged their onus of proving that the default assessments were excessive. 

Legislation

Revenue, Fines and Other Legislation Amendment Bill 2023 (NSW) now law

The Bill, which:

• makes various amendments to the Duties Act 1997 (NSW), including removing the time limit within which dutiable transactions need to occur to be treated as one under the aggregation provisions, extending the duty concession for property vested in an apparent or real purchaser to the legal personal representative of such a purchaser, and providing a duty exemption for transfers to registered native title bodies corporate if the transfer is in accordance with an indigenous land use agreement;
• amends the Land Tax Management Act 1956 (NSW) to provide that land used as a site for a school is exempt from land tax even if the land is not owned by the school;
• amends the Payroll Tax Act 2007 (NSW) to ensure that successor entities used by phoenix operators constitute a group with the former or deregistered entities (with the intent of enabling payroll tax to be better recovered from such groups);
• corrects minor drafting errors in the Property Tax (First Home Buyer Choice) Act 2022 (NSW); and
• makes numerous amendments to the Taxation Administration Act 1996 (NSW), including that the 5-year limit on reassessment of a taxpayer’s liability does not apply if the reassessment is to give effect to a decision about an objection or review of any assessment or where not all relevant facts and circumstances were disclosed to the Chief Commissioner, creating a new offence of tax evasion (the maximum penalty for which is 500 penalty units, 2 years imprisonment, or both), limiting the Chief Commissioner’s ability to allow out of time objections to cases where the objection is lodged within 5 years after the assessment or decision, providing a statutory pause on payroll tax audits in relation to medical practices and GPs for 12 months from the date of assent, and also introducing a 12-month pause on penalty tax and interest accruing on GP’s outstanding tax debts from the date of assent,

received royal assent on 4 September 2023 and is now law. 

Treasury Laws Amendment (2023 Measures No 3) Bill 2023  (Cth) awaits assent

The Bill (covered in the Birchstone Brief for the week ending 16 June 2023), which proposes technical changes to the First Home Super Saver Scheme to improve its flexibility, has passed both Houses of the Commonwealth Parliament and is currently awaiting royal assent. 

Treasury Laws Amendment (2023 Law Improvement Package No 1) Bill 2023 (Cth) awaits assent

The Bill (covered in the Birchstone Brief for the week ending 16 June 2023), which is intended to improve the operation of Treasury portfolio legislation through minor and technical amendments and other changes recommended by the Australian Law Reform Commission, has passed both Houses of the Commonwealth Parliament and is currently awaiting royal assent. 

Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023 (Cth) awaits assent

The Bill (first covered in the Birchstone Brief for the week ending 25 November 2022), which implements measures relating to the modernisation of communications, financial services laws and ASIC instruments, has been passed by both Houses of the Commonwealth Parliament and is currently awaiting royal assent.