Monthly Archives: February 2022

‘Alarm bells ringing’ on ATO trusts tax crackdown – reimbursement agreements, deemed dividends & distributions to adult and minor children

[AFR 23.2.22] The Tax Office’s latest crackdown on payments from family trusts will limit “washing machine” cash distributions and tax-saving arrangements completed under the guise of ordinary family business. A long-awaited draft ruling and practical compliance guidelines were released by the Australian Taxation Office on Wednesday, flagging permanent changes that accounting experts said would ring alarm…

Section 100A, Division 7A & Tax Alert on trust distributions to family members : the new guidance – TR 2022/D1, PCG 2022/D1, TA 2022/1 & TD 2022/D1

In the Tax Institute’s weekly email to members: TaxVine (5, 25.2.22), their Vice President’s Report: Marg Marshall, CTA wrote about the long-awaited draft guidance materials on the application and operation of section 100A (s100A) [see related TT article] and Division 7A (Div 7A) of Part III of the Income Tax Assessment Act 1936 (ITAA 1936) [see related…

Draft TR 2022/D1 and Draft PCG 2022/D1 – ATO’s well signalled s100A and Trust ‘reimbursement agreements’ guidance

On Wed 23.2.2022, the ATO released its long awaiting guidance on trust reimbursement agreements, Draft TR 2022/D1. A companion product – Draft Practical Compliance Guideline PCG 2022/D1 – was also issued. See related TT article. Draft TR 2022/D1 identifies, and discusses, 4 basic requirements for s100A of the ITAA36 to apply: the “connection” requirement –…

TD 2022/D1 – Division 7A: revised ATO view on UPEs and sub-trusts

On Wed 23.2.2022, the ATO released the well signalled Draft Determination TD 2022/D1 on the application of Div 7A in relation to unpaid present entitlements (UPEs) and sub-trusts (see related TT article). Specifically, the Draft sets out the ATO’s revised draft views that a private company beneficiary provides “financial accommodation” to the trustee or a shareholder (a…

Appeals update: Peter Greensill Family Co Pty Ltd (taxpayers’ High Court special leave refused)

The High Court has refused the taxpayers’ applications for special leave to appeal against the decision of the Full Federal Court in Peter Greensill Family Co Pty Ltd (Trustee) v FCT [2021] FCAFC 99. The Full Federal Court decision, which now stands, had dismissed the taxpayers’ appeals against 2 separate decisions that trustees of resident…

Facebook Inc v Australian Information Commissioner – Facebook carried on business in Australia by installing cookies on local computers and providing Australian ‘app’ developers and interface

On 7 February 2022, the Full Federal Court unanimously agreed with the first instance judge that Facebook was carrying on a business in Australia for the purposes of the Privacy Act, when it installed and deployed cookies on users’ computers in Australia as well as providing an interface to Australian app developers, despite Facebook getting…

North Australian Contracting Pty Ltd v CofT – No JobKeeper benefits because associated entities were not part of the same group and could not carry on the same business

On 16 February 2022, the AAT decided that a company was not entitled to JobKeeper payments, for 9 employees, for August 2020, as, on 1 July 2020, they were employed by a different, albeit associated, company which was not carrying on the same business as the applicant. The taxpayer’s position had, I think, more merit than might be evident, initially,…

Whiddon v CofT – Foreign source gain from share swap assessable as ordinary income for taxpayer who had become resident

On 10 February 2022, the AAT upheld the Commissioner’s assessment of a gain made on a complex arrangement from an exchange of shares and options, was assessable as ordinary income – as profit making arrangement or scheme. To  uphold the assessment, the AAT also had to find that the taxpayer was resident, in the relevant…