5 minute tax updates: 31 August – 4 September

Hybrid mismatch clarification
PRRT augmentation and GDP factors updated for 2020
New guide released for R&D tax incentive – comments invited
Capital gains and foreign income tax offset advice
Board of Tax says corporate tax residency rules need urgent reform
TPB webinars for the rest of the calendar year
Determination ensures continued access to cars and car parts for disabled
Bring forward rule for super contributions: Extension passes lower house
Draft practice note from TPB on client TFN use in emails

Updated guidance, and more time, on reporting of market-linked pensions
ATO has changed some URLs, so check any bookmarks
Low income earning clients may still need to lodge

Hybrid mismatch clarification
Legislation entitled Treasury Laws Amendment (2020 Measures No. 2) Bill 2020 has passed both houses and has just received Royal Assent. It contains a number of measures dealing with the hybrid mismatch rules to clarify their operation in the case of certain entities and circumstances, and includes measures dealing with distributions made on additional Tier 1 capital instruments that give rise to a foreign income tax deduction. Note that some amendments have different dates of effect.

PRRT augmentation and GDP factors updated for 2020
The ATO has provided a table showing Petroleum resource rent tax (PRRT) augmentation and gross domestic product (GDP) factor rates. For information about the different classes of deductible expenditure and which uplift rates to use for each class of deductible expenditure, refer to PRRT deductible expenditure.

New guide released for R&D tax incentive – comments invited
The Federal Government has issued a new guide to help assess whether a client’s research and development expenditure is eligible for the R&D Tax Incentive. The new guidance encapsulates Federal Court an AAT decisions made in the interim period since the last R&D tax incentive guidance was issued, and has links to other guidance publications. Comments are invited and are due by 25 September 2020.

Capital gains and foreign income tax offset advice
The ATO has released Taxation Determination TD 2020/7 advising that capital gains are not included under subpara 770-75(4)(a)(ii) of the ITAA 1997 in calculating the foreign income tax offset limit as, in the Commissioner’s view, the relevant statutory income is a taxpayer’s net capital gain and that it is a “source other than an Australian source”.

Board of Tax says corporate tax residency rules need urgent reform
The Board of Taxation’s August update has made it clear that the rules around tax residency are outdated and “in need of urgent reform”. CGT rollovers are another hot topic the Board is tackling, and welcomes feedback from practitioners to the email CGTrollovers@taxboard.gov.au

TPB webinars for the rest of the calendar year
The TPB has a range of webinars available for tax and BAS practitioners. These sessions are free and may count towards your continuing professional education (CPE).

Determination ensures continued access to cars and car parts for disabled
The legislative instrument ensures continued access to GST-free supplies of cars and car parts for disabled people who have lost the use of one or more limbs to such an extent that they are unable to use public transport, and intend to use the car for personal transportation to or from gainful employment.

Bring forward rule for super contributions: Extension passes lower house
A bill aimed at amending ITAA97 to extend the bring forward rule by enabling individuals aged 65 and 66 to make up to three years of non-concessional superannuation contributions from 1 July 2020 has been passed by the House of Representatives. It is now into the second reading in the Senate.

Draft practice note from TPB on client TFN use in emails
A draft practice note from the Tax Practitioners Board provides practical guidance and assistance to registered practitioners on the use and disclosure of client TFNs and related information in email communications. The TPB is also seeking comment.

Updated guidance, and more time, on reporting of market-linked pensions
The ATO acknowledges that retrospective law had been passed last June that provided a new way of calculating the debit that arises in an individual’s transfer balance account. This is when a member commutes a market linked pension which is a capped defined benefit income stream. While it has provided updated guidance on such calculations, it says it does not expect retrospective reporting until November.

ATO has changed some URLs, so check any bookmark
In the name of efficiency, the ATO has run a comb through its website, and as a result has found it necessary to refresh many of the links to incumbent pages. If your practice has bookmarks or favourites that you visit all the time, it couyld pay to make sure the information you expect is still there.

Low income earning clients may still need to lodge
If your client’s taxable income is under the tax-free threshold, they may still need to lodge a tax return. The ATO lists the common reasons for this here.

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