5 minute tax updates: October 14 – 18

The tax agent and BAS agent portals are shutting soon
Grandfathered commissions set to end
ASIC relief from financial adviser compliance scheme obligations
Lodgment due date concessions
ATO work in progress: Trust splitting
Tax outcomes from cross border related parties
Expansion of the RTP schedule to large private companies
Glencore transfer pricing case: ATO appeals
ASIC releases factsheet on establishing SMSFs
OECD proposal on digital multinationals

The tax agent and BAS agent portals are shutting soon
For some time now, the ATO has been making efforts to transition tax practitioners from the incumbent tax agent and BAS agent portals to its new Online services for agents system.  A public beta version closed in August last year, and since then detailed information has been made available, as well as information on related systems such as AUSkey. With most practitioners now using the new system, the ATO is about to close down the tax agent and BAS agent portals. A firm date is to be announced soon, however practitioners who have not made the transition are urged to do so at the earliest opportunity.

Grandfathered commissions set to end
Passed without amendment, the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 is set to become law. The bill will amend the Corporations Act from 1 January 2021 to end the grandfathering arrangements for conflicted remuneration in relation to financial advice provided to retail clients. The change responds to recommendation 2.4 of the Financial Services Royal Commission final report, but further provides for rebates for affected clients.

ASIC relief from financial adviser compliance scheme obligations
ASIC has announced that it will make a legislative instrument to provide relief to AFS licensees from financial adviser compliance scheme obligations. It follows a Treasury announcement that it is establishing a single disciplinary body for financial advisers. This disciplinary body will displace the role of compliance schemes in monitoring and enforcing the code of ethics. ASIC will grant a three-year exemption to all licensees.

Lodgment due date concessions
The ATO has reminded tax agents that if they think some of their clients may have missed out on the agent’s lodgment concession, the agent should wait until after 21 November 2019 to submit a deferral request on their behalf.

ATO work in progress: Trust splitting
The ATO has advise that its draft taxation determination TD 2018/D3, which deals with trust splitting, is still a work-in-progress. The question to be determined is whether a split arrangement cause a new trust to be settled over some but not all assets of the original trust, which could trigger CGT event E1.

Tax outcomes from arrangements made with cross border related parties
A draft version of an updated guideline has been issued for comment (PCG 2017/4DC1) which looks at the ATO’s compliance approach to the taxation outcomes associated with a “financing arrangement”, as defined in section 995-1 of ITAA 1997, or a related transaction or contract, entered into with a cross border related party.

Expansion of the RTP schedule to large private companies
Commencing in the 2020-21 income year, the reportable tax position (RTP) schedule will be expanded to include large private companies and corporate groups. The start date was deferred from the 2019 year, based on feedback and submissions.

Glencore transfer pricing case: ATO appeals
The ATO will be appealing the decision in Glencore Investment Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2019] FCA 1432. In this case, Justice Davies found in favour of the taxpayer in a marketing hub transfer pricing case involving the selling of copper concentrate by an Australian entity to a related marketing entity based in Switzerland. In broad terms, Justice Davies accepted the taxpayer’s basis of determining the arm’s length rate based on comparable agreements and opposed the ATO’s, which were based on hypothetical (reconstructed) arrangements.

ASIC releases factsheet on establishing SMSFs
In order to highlight the potential downsides to starting up an SMSF, ASIC has released its factsheet Self-managed superannuation funds: Are they for you? (download it here). ASIC contends that many investors are unaware of the risks and responsibilities that come with running an SMSF, and too many have set up funds unsuitable to their needs. The factsheet is slotted to be sent to all new trustees, once they elect to be regulated by the ATO, over November as a pilot program.

Select factoids from the factsheet:

  • it takes more than 100 hours a year to run an SMSF
  • the average coast of running an SMSF is $13,900 a year.

OECD proposal on digital multinationals
The OECD has issued a proposal to advance international negotiations to ensure large and highly profitable Multinational Enterprises, including digital companies, pay tax wherever they have significant consumer-facing activities and generate their profits. The proposal, which is open to public consultation, would see a re-allocation of some profits and corresponding taxing rights to countries and jurisdictions where enterprises have their markets.

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