5 minute tax updates: November 4-8

Back-to-basics on employee deductions
Top 4 reasons that lead to black economy dob-ins
CGT and cost base liability deduction
Commutation authorities for SMSFs
Sending a corrected Taxable payments annual report (TPAR)
Limiting deductions for vacant land
CGT rollover arrangements for certain trusts under scrutiny
Salary sacrificed super info for employers
Tax information exchange jurisdiction list gets eight new entries
ASIC warns trustees on new rules for “putting members’ interests first”

Back-to-basics guide on employee deductions
A new taxation ruling (in draft form) has been issued that is intended to provide the foundation of general deductibility principles for employee work expenses. Based on this foundation, practical guidance on common work expense types, including occupation-specific expenses, is provided through an appendix that gives a list of work expense categories with links to relevant rulings, determinations and other material published by the ATO. This ruling, TR 2019/D4, therefore provides both foundation guidance on general deductibility principles and direction to the more specific guidance products that are of most relevance to particular issues or expense types. The ATO says these links will be updated as further rulings and guidance products are created.

Top 4 reasons that lead to black economy dob-ins
The ATO’s Tax Integrity Centre, in the first quarter of this financial year, says it received a record high of 15,000 tip-offs. Topping the list of beefs that taxpayers had with black economy operators were: 1/ Not declaring income, 2/ Using cash to both pay staff and take customer payment, 3/ Enjoying a lifestyle incongruent with ‘income’, 4/ Not reporting sales.

CGT and cost base liability deduction
The purpose of a newly-released taxation determination can be gleaned from its name. TD 2019/D11 is titled Income tax: where a liability is assumed on acquisition of a CGT asset, is the assumed liability excluded from the cost base of the asset if expenditure on discharge of the liability is deductible?  The draft advises in the affirmative. Once finalised, it is proposed the TD (once issued) will apply both before and after its date of issue with the usual exceptions for settled cases.  Comments on the draft are due by 29 November.

Commutation authorities for SMSFs
The ATO has issued guidance on what should (and should not) be done should a trustee receive a commutation authority, which is a notice issued by the Commissioner of Taxation to a self-managed super fund (SMSF), when an SMSF member has exceeded their transfer balance cap and we have sent them an excess transfer balance determination.

Sending a corrected Taxable payments annual report (TPAR)
Some businesses, after lodging their Taxable payments annual report (TPAR), may find some information that was reported is incorrect, or they need to add a new payee. The ATO has released instructional tips on how to lodge an amendment. Also see here for general TBAR instructions.

Limiting deductions for vacant land
The bill Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019 became law on 28 October, and limits deductions available for expenses associated with holding vacant land. The ATO has published this page on its website to help explain how the changes apply for your client’s expenses for holding vacant land incurred on or after 1 July 2019, even if the land was held from before that date.

CGT rollover arrangements for certain trusts under scrutiny
A taxpayer alert has been released by the ATO that takes issue with certain arrangements that purportedly allow a unit trust to effectively dispose of a CGT asset to an arm’s length purchaser with no CGT consequences. The arrangements seek to exploit the CGT rollover for trust restructures, with the ATO concerned that taxpayers may be entering into these arrangements to avoid tax on large capital gains that would otherwise be made from the disposal of CGT assets.

Salary sacrificed super info for employers
The ATO reminds employers that from 1 January 2020, salary sacrificed super contributions cannot be used to reduce SG obligations, regardless of the amount an employee elects to sacrifice. This means the salary sacrificed amount will not count towards SG obligations.

Tax information exchange jurisdiction list gets eight new entries
The bill Taxation Administration Amendment (Updating the List of Exchange of Information Countries) Regulations 2019, only registered on 1 November, adds the following countries to the list of tax information exchange  countries — UAE, Qatar, Peru, Panama, Pakistan, Nauru, Lebanon and Curaçao. A trustee of an MIT making a “fund payment” to a foreign resident can withhold at a lower 15% rate for list entrants rather than the default 30%. Date of effect 1 January 2020.

ASIC warns trustees on new rules for “putting members’ interests first”
ASIC has issued a letter to superannuation industry associations to highlight expectations relating to member communications associated with the Treasury Laws Amendment (Putting Members’ Interests First) Act 2019 and further member communications associated with the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019. In the letter, ASIC reminds trustees they are required to provide notice in writing, by 1 December 2019, to those members whose balances are less than $6,000 and who hold insurance cover. The notice must outline that from 1 April 2020, the member’s insurance cover will cease unless the member elects in writing to retain it.

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