Birchstone Brief for the weeks ended 19 and 26 July 2024

ATO Updates

Guidance regarding interaction of NALI rules & CGT provisions finalised

TD 2024/5, which was previously issued in draft as TD 2023/D1, sets out the Commissioner’s views regarding how the non-arm’s length income (NALI) rules and CGT provisions interact to determine the amount of statutory income that is NALI where a capital gain is made by a superannuation fund as a result of non-arm’s length dealings. 

Guidance regarding deductibility of payments to superannuation fund trustees finalised

TD 2024/6, which was originally issued in draft as TD 2023/D3 (covered in the Birchstone Brief for the week ended 8 December 2023), sets out the Commissioner’s views regarding when a superannuation fund will be able to claim a deduction pursuant to section 8-1 of the ITAA 1997 for payments to its trustee. 

Other News

Productivity Commission recommends overhauling DGR system

In its Final Report concerning the inquiry into the future of philanthropic giving in Australia, released on 18 July 2024, the Productivity Commission made a number of recommendations to improve the foundations of philanthropy. These included that:

  • the deductible gift recipient (DGR) system should be reformed (on the basis that the current system is not fit for purpose due to its poor design, complexity and lack of a coherent policy rationale); 
  • removing the $2 threshold for tax deductible donations; and
  • establishing a ruling system and test case funding program for the ACNC, in order to support certainty in regulatory outcomes and advance the law. 

TPB summary of recent regulatory changes

The Tax Practitioners Board has issued a media release summarising the recent changes to the Tax Agent Services Act 2009 (Cth) and the regulation of tax practitioners, following the passage into law of the Treasury Laws Amendment (Tax Accountability and Fairness) Act 2024 (Cth). These changes include: 

  • Changing the registration period for tax agents from 3 years to 1 year with effect from 1 July 2024.
  • The expansion of the Code of Professional Conduct, including the eight additional code items introduced by the Tax Agent Services (Code of Professional Conduct) Determination 2024 with effect from 1 August 2024.
  • From 1 July 2024, the mandatory requirement for tax agents to report any significant breaches of the Code to the Tax Practitioners Board (whether that breach is committed by the tax agent themselves or another registered tax practitioner). 
  • Extending the timeframe for the Tax Practitioners Board to make a decision about the outcome of an investigation to 24 months (up from 6 months). 

AAT to be replaced with ART in October 2024

The Attorney-General’s Department has issued a media release confirming that the AAT will be replaced by the Administrative Review Tribunal (ART) with effect from 14 October 2024. 

 

Legislation

Exposure draft legislation and explanatory materials – changes to CGT withholding regime for foreign residents

Treasury has released exposure draft legislation and explanatory materials relating to the government’s proposal to strengthen the CGT withholding regime that applies to foreign residents, originally announced in the Mid-Year Economic and Fiscal Outlook for 2024-25 (covered in the Birchstone Brief for the week ended 15 December 2023). The proposed changes include increasing the withholding rate to 15% and reducing the withholding threshold from $750,000 to $0. 

 

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