The Commissioner of Taxation has limited powers to modify the implementation of tax law in circumstances where taxpayers will benefit, or at least be no worse off, as a result of the modification.
The first use of this power to modify the law (the Commissioner’s remedial power, or CRP) took effect on 17 October 2017. The affected provisions are in Schedule 1 to the Taxation Administration Act 1953, and include:
The modification ensures property sellers who are subject to foreign resident capital gains withholding are able to access withholding credits in a simpler and timelier manner when the sale process spans more than one financial year.
The simplest and most common case where the modification will help sellers is when a contract entered into in May or June settles in July or August of the same calendar year, giving rise to a capital gain withholding requirement for the non-resident seller.
In these cases, the current operation of the law can increase compliance costs for affected sellers, as they will generally be required to lodge two separate Australian tax returns. The commissioner has modified this so that non-resident property sellers now only need to lodge one tax return to account for their capital gains tax liability and claim the foreign resident capital gains withholding credit paid by the purchaser to the ATO.
If you or your clients have an issue that you consider may require application of the remedial powers, the ATO requires this form to be used. The ATO advises practitioners that if they require any further information on the modifications made under the CRP, please contact the CRP Secretariat. For more information on the remedial powers overall, visit ato.gov.au/crp.
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