Birchstone Brief for the week ended 22 September 2023

ATO Updates

Class and product rulings issued

The ATO has issued the following:

• CR 2023/50 – Nuonic Pty Ltd – Prism software platform – Vehicle activity measurement (kilometres and time) for fuel tax credit purposes; and 
• CR 2023/51 – FAR Ltd – Return of capital; 
• PR 2023/18 – Morgan Stanley Option and Loan Facility; and 
• PR 2023/19 – Fringe benefits tax consequences for employers under an Origin electric vehicle subscription agreement. 

State Taxes

NSW 2023-24 State Budget

The New South Wales Treasurer handed down the NSW State Budget for 2023-24 on 19 September 2023. It contained the following tax-related measures.

• The expansion of the First Home Buyers Assistance Scheme. From 1 July 2023, first home buyers who sign a contract to purchase a new or existing home can receive a full stamp duty exemption for purchases worth up to $800,000 and a concession on purchases between $800,000 and $1 million. 
• The announcement of a number of tax integrity and fairness measures. These are intended to close loopholes associated with existing tax concessions, address avenues for tax avoidance and moderately increase fixed charges on certain fixed and nominal duty transactions. Significantly, NSW’s corporate reconstructions and consolidations exemption for internal corporate restructures will be replaced with a 90% concession (i.e. instead of being 100% exempt, such restructures will in future be chargeable with 10% of the transfer duty which would otherwise have been payable on the asset transfers). 
• The NSW State Government will make increased investments in Revenue NSW’s compliance systems, which is expected to increase revenue by several hundred million dollars over the four years to 2026-27. 
• From 1 January 2024, stamp duty exemptions and rebates for the purchase of electric vehicles will cease. Liability for the NSW road user charge will also change so that all zero and low-emissions vehicles registered or transferred from 1 January 2024 will be liable to pay the charge from the earlier of 1 July 2027 or when electric vehicles amount to 30% of new vehicle sales. 
• Revision of the indexation formula for land tax threshold purposes, with effect from the 2024 land tax year. 

Payroll Tax (Qld): Application of relevant contract provisions to direct client-practitioner payments

The Queensland Revenue Office has issued PTAQ000.6.2, which updates the Office’s existing ruling on the application of the relevant contract provisions to medical center businesses. The main change to the ruling is the express statement that, under normal business arrangements, patient fees (including Medicare benefits and any out-of-pocket expenses) paid directly by a patient to a general practitioner for their services will not be subject to payroll tax under the relevant contract provisions. 

Cases

Assad v FCT [2023] AATA 2995 – No entitlement to ABN or GST registration as no evidence of an enterprise

The AAT has ruled that a taxpayer was not entitled to hold an ABN or be registered for GST on the basis that he was not carrying on an enterprise, and in so doing upheld the Commissioner’s objection decision to the same effect. The reason for this conclusion was that, despite the over $100,000 in input tax credits claimed by the taxpayer in the relevant period, absolutely no evidence (such as bookings or invoices or specific details of alleged customers) was put forward before the Tribunal to substantiate the taxpayer’s claims that he had undertaken an activity or series of activities in the form of a business. Nor was the mere fact that the taxpayer had arranged for a business name and registered an ABN and for GST evidence that he had been conducting a business enterprise. 

Appeals – Edge Developments

The taxpayer has applied to the High Court for special leave to appeal against the South Australian Court of Appeal’s decision reported at [2023] SASCA 88 (covered in the Birchstone Brief for the week ended 25 August 2023). In that case, the Court of Appeal held that:

• a unit trust’s equitable interest in land pursuant to a performance charge was a relevant interest in land sufficient to render it a land holding entity; and
• as such, a redemption of units in the unit trust that led to an increase in the relevant taxpayers’ interests was a dutiable transaction.

Legislation

Exposure draft legislation in response to PwC scandal

Treasury has released exposure draft legislation and associated explanatory materials on a number of topics in response to the PwC scandal, as follows:

• draft amendments to the TASA 2009, which will extend the time TPB has to conduct investigations into suspected misconduct from 6 to 24 months and improve the functionality, utility and transparency of the TPB Register; 
• draft amendments to the TAA 1953, which are intended to reform and strengthen the promoter penalty laws by increasing the time the ATO has to bring an application for civil penalty proceedings, aligning the maximum civil penalties that can be imposed on promoters with those in the Corporations Act 2001 (Cth), and expanding the provisions’ application; 
• draft amendments to the TAA 1953 and associated Regulations, which will extend whistleblower protections to a range of new disclosures related to potential misconduct by tax practitioners and prescribe the TPB and ACNC as eligible recipients of whistleblower information; and
• draft amendments to the TAA 1953 and the TASA, which will remove limitations in the tax secrecy laws which were a barrier to regulators acting in response to PwC’s breach of confidence and enable the ATO and the TPB to refer ethical misconduct by advisors with prescribed professional associations for disciplinary action.

Treasury and Revenue Legislation Amendment Bill 2023 (NSW) passes both Houses

The Bill containing some of the tax-related measures announced in the 2023-24 NSW State Budget was passed by both the NSW Legislative Assembly and Legislative Council on Thursday 21 September 2023.

Treasury Laws Amendment (2023 Measures No 3) Bill 2023  (Cth) now law

The Bill (covered in the Birchstone Brief for the week ending 16 June 2023), which contains technical changes to the First Home Super Saver Scheme to improve its flexibility, received royal assent on 20 September 2023 and is now law.

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, received royal assent on 20 September 2023 and is now law.