On Thursday 5.5.2016 the Commissioner registered the Excluded Classes of Transactions and Entities for Third Party Reports on Shares and Units Determination 2016.

The Legislative Instrument exempts classes of transactions from having to be reported to the Commissioner, and to exempt certain entities from having to prepare and lodge reports under the new s396-55 Subdiv 396-B – Information about transactions that could have tax consequences for taxpayers of the Taxation Administration Act 1953, First Schedule or ‘TAA1’ (this subdivision was inserted by No 162 of 2015, s 3 and Sch 4 item 1, effective 30 November 2015).

The Commissioner is given the power to exempt classes of entities from reporting and allows the Commissioner to exempt certain classes of transactions from being reported, by making a legislative instrument, under s396-70(4)  of the TAA1. This instrument does so in relation to items 6, 7 or 8 in the table in s396-55.

Items 6, 7 and 8 in this table require entities to report to the Commissioner information about transfers of shares or units in a unit trust. The information that is required to be reported is in relation to the change to the type, name and number of the shares or units held by an entity (see extract of these items below).

There is an exemption for listed companies otherwise required, under Item 6, to report changes in shareholdings that are not reported to Australian Securities and Investment Commission (ASIC) under the market integrity rules. The bulk of the share transaction information required by the Commissioner will be captured through the existing ASIC market integrity system and the transactions in the remaining markets are exempted. This is because the Commissioner considered it burdensome for brokers and listed entities having to report share transfers not monitored under ASIC’s integrity rules.

There is an exemption for small unit trusts and trustees of other trusts the instrument exempts certain trustees from having to prepare and lodge reports to the ATO. This recognises that the benefit of very small entities providing third party data reports is frequently outweighed by the cost. The instrument provides exemptions for small unit trusts with less than 10 investors and less than $5 million in assets.

There is also an exemption for trustees, other than trustees of a unit trust, if they are not required to hold an Australian Financial Services Licence and hold total assets of less than $5 million in all trusts of which they are the trustee. They would otherwise have had to report changes in the holdings for beneficiaries who are absolutely entitled to shares in companies and units in trusts, unless they lodged an income tax return for that year (item 8).

The Legislative Instrument commences on 1 July 2017.

[Federal Register of Legislation – 2016 Determination & Explanatory Statement] [LTN 85, 5/5/16]

Extract from s396-55 TAA1 – items 6, 7 & 8

Information to be reported by third parties about transactions
Column 1 Column 2
Item This entity: must report information about this transaction:
6 a company whose *shares are listed for quotation in the official list of an *Australian financial market a transaction that:
(a) results in a change to the type, name or number of *shares in the company that are held by an entity; and
(b) is not a transaction about which data is required to be delivered to *ASIC under the *market integrity rules
7 the trustee of a unit trust a transaction that:
(a) results in a change to the type, name or number of units in the unit trust that are held by an entity; and
(b) is not a transaction about which data is required to be delivered to *ASIC under the *market integrity rules
8 the trustee of a trust (other than a unit trust) a transaction that results in a change to the type, name or number of any *shares in a company, or units in a unit trust:
(a) that are held as assets of the trust; and
(b) to which one or more entities are absolutely entitled as beneficiaries of the trust;
unless the trustee gives the Commissioner an *income tax return for the income year in which the transaction was entered into
Note: