5 minute tax updates: 2-6 December

Bill to see no CGT exemption for non-residents passes both houses
Foreign resident capital gains withholding rules
SA’s land tax bill passes
Court finds illegally obtained information can be used for tax assessments
Help to clear away the contractor/employee fog
ATO gets extension for appeal against Glencore outcome
The undischarged bankrupt, his default assessments and the AAT
The essentials about Online services for agents
Guidance and advice under development
Accredited service provider list for e-invoicing
Residency tax law outcomes from Harding case “unfavourable”, says Commissioner
Fuel tax credit claim time limit draft ruling withdrawn
Introduced corporate crimes bill also amends other acts
Superannuation matters given ATO attention
Self-assess the requirement to lodge an RTP schedule
ADHD and taxation obligation hardship
Client in building maintenance and property management? They may need to lodge a TPRS
Are you ready for myGovID and RAM?


Bill to see no CGT exemption for non-residents passes both houses
The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 just passed the Senate. There were no amendments. The bill denies the main residence exemption to foreign residents from 7.30pm 9 May 2017, or from 1 July 2020 if they held the property on 9 May 2017.

Listen to the Tax Wrap podcast episode 204 to hear of some of the implications likely to stem from this change.

Foreign resident capital gains withholding rules
The foreign resident capital gains withholding (FRCGW) rules apply to vendors disposing of certain taxable property under contracts entered into from 1 July 2016. For contracts that are entered into from 1 July 2016 and before 1 July 2017, even if they are not due to settle until after 1 July 2017, the FRCGW withholding tax rate is 10% and applies to real property disposals where the contract price is $2 million and above. Now, the FRCGW tax rate is 12.5%, and it also applies to real property disposals where the contract price is $750,000 or more.

SA’s land tax bill passes
The Marshall SA government’s Land Tax (Miscellaneous) Amendment Bill 2019 has passed the State’s parliament, and will significantly reduce land tax in the state. The top SA land tax rate will reduce from a national high of 3.7% to 2.4%, which is equal to the average of all mainland states.

Court finds illegally obtained information can be used for tax assessments
The Federal Court has held that taxation officers could rely on illegally obtained information to issue tax assessments. The court dismissed the taxpayer’s application (see Deputy Commissioner of Taxation v Advanced Holdings Pty Ltd [2019] FCA 1917) that sought orders to quash several tax assessments on the basis that they were invalid due to conscious maladministration of the income tax assessment process, and orders for declaratory and injunctive relief.

Help to clear away the contractor/employee fog
It’s not unusual to still come across clients who struggle to come to a clear idea about whether their staff are employees or really contractors (here’s some ATO guidance). There are many deciding factors to determine if a worker is an employee or contractor for tax and super purposes, but there are some constants. When taking on an apprentice, trainee, labourer or trades assistant, remember that these workers are always employees, never contractors. And when hiring a company, trust or partnership to do the work, these arrangements are always as a contracting relationship for tax and super purposes.

ATO gets extension for appeal against Glencore outcome
The Federal Court has granted the ATO an extension of time to lodge its appeal to the Full Federal Court against the decision of a single judge of the Federal Court over the Glencore transfer pricing decision reached in September.

The undischarged bankrupt, his default assessments and the AAT
The applicant in these proceedings (known as JKQT) before the Administrative Appeals Tribunal was an undischarged bankrupt. The AAT was required to decide whether that fact required it to find the applicant had no standing, and therefore the AAT had no jurisdiction, to review a decision not allowing the applicant’s objections against default income tax assessments.  The AAT dismissed the proceedings, finding that continuing the proceedings would be futile. The proceedings were then regarded as frivolous and vexatious.

The essentials about Online services for agents
The ATO has made available information about key features available in Online services for agents and system updates. The functions available to you in the system are determined by the services you provide as a tax or BAS agent and your Access Manager permissions. See here for key changes, terminology updates and more. A user guide has also been created. The ATO also promises that any feedback from practitioners is not only welcome, but has led to it making changes to the system.

Guidance and advice under development
The ATO advices that it is developing advice and guidance on trust-specific issues, superannuation issues, the not-for-profit sector, certain excise factors, some administration issues, and some specific FBT elements.

Accredited service provider list for e-invoicing
The ATO has provided a register of service providers that have completed the Australian Peppol Authority accreditation process and are trusted to operate in the network. It emphasises that businesses should speak to a range of service providers about their offerings to ensure the user chooses one that meets their needs.

Residency tax law outcomes from Harding case “unfavourable”, says Commissioner
The Taxation Commissioner has issued a decision impact statement regarding the case Harding v Commissioner of Taxation. The issue was whether the individual was a “resident” of Australia under the “domicile test” or the “ordinary concepts test”. The court on appeal found that Mr Harding was not a resident under either test. The Commissioner’s special leave application to the High Court was refused. In light of the final decision, the ATO says it will be reviewing taxation ruling IT 2650 in terms of how “place of abode” is defined when determining residency.

Fuel tax credit claim time limit draft ruling withdrawn
The draft Miscellaneous Taxation ruling MT 2018/D1, issued last year to a mixed response, has been withdrawn. The draft ruling proposed setting a time limit to claim fuel tax credits to four years from the due date of the first business activity statement in which they could have claimed the credit, with no possible extension by requesting an amendment, lodging an objection or applying for a private ruling. The ATO says if the views expressed in MT 2018/D1 have been applied in a client’s affairs, you can email RDRengagement@ato.gov.au to discuss.

Introduced corporate crimes bill also amends other acts
A bill previously introduced, but that lapsed in July upon prorogation of parliament, has resurfaced as the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019. It amends a few other acts, such as the criminal code, the ITAA97 and the GST act. Changes include amending the definition and scope of what “bribery” is, and implementing a scheme, called a Deferred Prosecution Agreement (DPA), under which the Commonwealth Director of Public Prosecutions can invite a person (other than an individual) that has engaged in serious corporate crime to negotiate an agreement to comply with a range of specified conditions. The bill amends the GST act so that a party to a DPA cannot claim input tax credits for a loss or outgoing incurred under its terms.

Superannuation matters given ATO attention
The ATO has updated several of its webpages and other guidance on superannuation, including:

Self-assess the requirement to lodge an RTP schedule
From 30 June 2019, public or foreign owned companies are no longer notified of their obligation to lodge a Reportable tax position (RTP) schedule. Instead, they are required to self-assess the company’s requirement to lodge based on certain criteria.

ADHD and taxation obligation hardship
At issue in the case of GSJW and Commissioner of Taxation (Taxation) [2019] AATA 5170 was whether the taxpayer should be granted a whole or partial release from his tax liabilities on the basis of serious hardship.  The amount owed to the ATO almost entirely comprised of General Interest Charge (GIC).  In 1995, the taxpayer was diagnosed with ADHD and the taxpayer gave evidence that this condition had affected his ability to satisfy his taxation obligations.  The AAT decided that the taxpayer should be released from all of the GIC payable to the ATO but he was required to pay all of the remaining income tax owed.

Client in building maintenance and property management? They may need to lodge a TPRS
The ATO says that building maintenance and property management businesses providing cleaning services may need to complete a Taxable Payments Annual Report (TPAR) (NAT 74109). This will be the case if they have an ABN, pay contractors for cleaning services on the business’s behalf, and payments received for this make up 10% or more of total GST turnover (even if not registered for GST). TPARs are due 28 August each year.

Are you ready for myGovID and RAM?
AUSkey will be retired at the end of March 2020 and will be replaced by myGovID and Relationship Authorisation Manager (RAM). The ATO says that together these services will provide tax practitioners with a secure, simple and flexible access to government online services, including the ATO Business Portal.

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