5 minute tax updates: 18-22 May

Div 7A trust entitlements and new lodgment day
BEPS and a re-definition of significant global entity

Child support via STP reporting
Practice statement law administration COVID-19 updated
Draft instrument released for comments
Capital allowance car limit increase for 2020-21
June due dates
Legislative instrument finalised on intermediary LRBAs and in-house assets
Total and permanent disability claim support for COVID-19
Where the Commissioner’s remedial power has been used
Exemption to tax due to foreign service not changing for COVID-19

Div 7A trust entitlements and new lodgment day
An administrative tweak has been made necessary due to the extension of time that has been granted to lodge income tax returns to 5 June 2020. PS LA 2010/4 has been amended to reflect extensions to lodging deadlines, and how to deal with unpaid present entitlements, in relation to corporate beneficiaries. It provides three options where the ATO will consider that the funds held in a sub-trust are held for the sole benefit of the private company beneficiary.

BEPS and a re-definition of significant global entity
The Treasury Laws Amendment (2020 Measures No. 1) Bill 2020, which has passed both houses, amends the country-by-country (CBC) reporting requirements and the requirement to provide general purpose financial statements so that they apply to a subset of significant global entities (referred to as CBC reporting entities) rather than all significant global entities. It also introduces the concept of a “notional listed company group”, where a group of entities that would be required to consolidate for accounting purposes as a single group under the applicable accounting rules if the parent entity of the group was a listed company, and exceptions to requirements about when a group of entities would be required to consolidate, including materiality rules, were disregarded.

Child support via STP reporting
Among other matters (hybrid mismatch rules, more deductible gift recipients, tax secrecy in relation to JobKeeper and more), the Treasury Laws Amendment (2020 Measures No. 2) Bill 2020 broadens the amounts employers can voluntarily report under single touch payroll.  The changes will allow these amounts to also include an employer withholding child support deductions from wages and child support garnishee amounts that are paid to the Child Support Registrar (and to therefore not be required to report to the latter).

Practice statement law administration COVID-19 updated
PS LA 2008/3, which deals with the provision of ATO advice and guidance, has been updated by an addition to the list of topics on which administratively binding advice can be provided. That list now includes advice on the legislation and associated regulations which form part of the Coronavirus Economic Response Package.

Draft instrument released for comments
A draft instrument, Taxation Administration Excluded Classes of Transactions and Entities for Third Party Reports on Shares and Units Determination 2020 (TPRE 2020/D2) has been released, which will replace a previous instrument covering similar exemptions to reporting. It is intended to exempt certain classes of transactions from being reported to the Commissioner and to exempt certain entities from having to prepare and lodge reports, in relation to items 6, 7 or 8 in the table included in section 396-55 of Sch 1 to the Taxation Administration Act 1953. Comments are open until 9 July.

Capital allowance car limit increase for 2020-21
The car limit for capital allowance purposes for 2019-20 is $57,581, but for 2020-21 it will increase to $59,136. This is the maximum value a taxpayer can use to work out the depreciation claim for vehicles, irrespective of the amount they may have been paid for a trade-in. The indexation factor is 1.027, calculated as 377.9 divided by 368.1. The car limit used to be issued via an annual tax determination, but this will no longer be the case.

June due dates
The ATO lists due dates for June. Unless otherwise stated, the due dates provided are for 30 June balancers only. The payment due dates for a tax return are determined by client type, the lodgment due date and when the return is lodged. When a due date falls on a Saturday, Sunday or public holiday, you can lodge or pay on the next business day.

Legislative instrument finalised on intermediary LRBAs and in-house assets
After a period of stakeholder consultation, the ATO has now registered the legislative instrument that will exclude an investment as being an in-house asset of an SMSF in a related trust. The circumstances are that the investment in the related trust must be in connection with an intermediary limited recourse borrowing arrangement. This is also required to comply with s 67A of the SISA. It commences retrospectively from 24 September 2007.

Total and permanent disability claim support for COVID-19
The Financial Services Council has announced an initiative on behalf of participating life insurance member companies to ensure that if people lose their job, are stood down or have reduced working hours due to COVID-19, this will not affect their total and permanent disability cover. To align with the JobKeeper scheme, the initiative runs to 27 September 2020 and claims must be lodged before 1 January 2021.

Where the Commissioner’s remedial power has been used
The Commissioner’s remedial power (CRP) provides for limited powers to modify the operation of tax law in circumstances where entities will benefit, or at least be no worse off, as a result of the modification. To assist practitioners, the ATO has provided a page containing an index of each time the Commissioner has modified the operation of the law using the CRP, along with links to legislative instruments and explanatory materials.

Exemption to tax due to foreign service not changing for COVID-19
Under present rules, if a taxpayer had already completed 91 days of continuous foreign service and met all the other requirements in section 23AG of the Income Tax Assessment Act 1936, the foreign earnings while undertaking the completed foreign service will remain exempt income. But the ATO has stated in a fact sheet that this will not change, despite COVID-19-related worker movements.

[], [], []

Post a comment