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email to members: TaxVine (5, 25.2.22), their Vice President’s Report: Marg Marshall, CTA wrote about the long-awaited draft guidance materials on the application and operation of section 100A (s100A) [see related TT article] and Division 7A (Div 7A) of Part III of the Income Tax Assessment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

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,…

Perpetual Corporate Trust Ltd v Commissioner of State Revenue –  student accommodation exempt from SA land transfer duty – 1 semester stays too short to be ‘residential’ (GST meaning adopted)

On 25 January 2022, the South Australian Supreme Court decided that purpose-built student accommodation facility was not used predominantly for residential purposes and therefore qualified for a stamp duty exemption. The Court used the GST case of Marana Holdings, to interpret ‘residential’ and ‘reside’ having some permanence or long-term nature. The facts were these. In September 2019…

Section 100A and Division 7A: looking back down the path to the ATO’s imminent new draft guidance (for consultation)

The word is that next week (beginning 21.2.22), the ATO will release draft guidance on the anti-trust stripping s100A and the dreaded ‘deemed dividend’ provisions in Division 7A. We expect the following, for public consultation: (1) Draft Ruling on s100A; (2) Draft PCG on s100A; and Draft Determination on Division 7A. In the Tax Institute’s weekly member new email: TaxVine…

Mobbs v CofT – Payments and shares issued to a company providing individual’s services as a director, treated as individual’s income

On 10 February 2022, the AAT decided that payments made by various entities, to a service company, for the individual’s services, as a director, were ordinary income of the individual (and not the service company). It reached a similar conclusion about shares that these entities, issued to the service company, to satisfy the invoices. The…

ATO consultation report – for months of December 2021 and January 2022

The ATO has reported on its consultation activities in December 2021 and January 2022. This is available on in pdf form (see below) and it is posted on the ATO’s website. The reports are and shared with their stewardship groups. This report contains the following (see pdf or ATO website). Consultation matters Statistics Consultation matters…