Notice of Ruling, Notice of Addenda

Overview

The Australian Taxation Office (ATO) has issued several rulings and addenda under the A New Tax System (Goods and Services Tax) Act 1999 to clarify various tax obligations and address specific issues that arose with the introduction of digital currency. These rulings, which are available on the ATO's website, aim to provide certainty and guidance to taxpayers regarding the deductibility of donations, the treatment of ex gratia payments by insurers, the GST implications of retail foreign currency exchange transactions, and the GST treatment of digital currency. Each of these rulings and addenda applies from specific dates as noted, reflecting the ongoing adjustments and clarifications necessary to ensure the effective and fair administration of the GST Act. The ATO, under the leadership of Commissioner Chris Jordan, continues to update these documents to address emerging issues and legislative changes.

Scope and Application

The Commissioner of Taxation has issued several rulings and addenda concerning specific tax issues, primarily under the A New Tax System (Goods and Services Tax) Act 1999 and the Income Tax Assessment Act 1997. CR 2018/19 provides guidance on the deductibility of donations to MDA Limited under a Donation Deed, applicable from 9 May 2018. These rulings and addenda, such as GSTD 2011/1, GSTD 2012/5, GSTR 2000/25, GSTR 2003/13, GSTR 2006/10, and GSTR 2014/1, focus on the application of GST to various transactions, including insurance settlements, retail foreign currency exchange, and motor vehicle incentive payments, with amendments applying from 1 July 2017. These legislative instruments extend their application through subordinate instruments and apply to entities and individuals engaged in the specified activities within Australia. The rulings provide clarity on complex tax issues, ensuring taxpayers understand their obligations under the law.

Key Provisions

The Commissioner of Taxation has issued several rulings and addenda that provide guidance on the interpretation and application of certain sections of Australian tax legislation. CR 2018/19 (section 3) addresses the deductibility of donations to MDA Limited under a Donation Deed, outlining the Commissioner's position on the matter. GSTD 2011/1, amended by an addendum, examines whether an ex gratia payment by an insurer in response to a claim under an insurance policy constitutes a payment made ‘in settlement of a claim’. GSTD 2012/5, amended by an addendum, considers whether acquisitions related to an entity's retail foreign currency exchange transactions with customers in Australia are made solely for a creditable purpose under section 11-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). GSTR 2000/25, amended by an addendum, discusses the GST treatment of water, sewerage and sewerage-like services, storm water draining services and emptying of a septic tank. GSTR 2003/13, amended by an addendum, provides guidance on the GST treatment of general law partnerships. GSTR 2006/10, amended by an addendum, examines the GST treatment of digital currency and the entitlement to input tax credits for insurance settlements. Lastly, GSTR 2014/1, amended by an addendum, discusses the GST treatment of motor vehicle incentive payments. These rulings and addenda impose obligations on taxpayers, insurers, and entities engaged in retail foreign currency exchange transactions, water, sewerage and sewerage-like services, storm water draining services, emptying of a septic tank, general law partnerships, insurance settlements, and motor vehicle incentive payments. They require these parties to interpret and apply the relevant provisions of Australian tax legislation in accordance with the guidance provided by the Commissioner of Taxation. Failure to comply with these rulings and addenda may result in penalties or other consequences under the relevant legislation. The A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and the A New Tax System (Goods and Services Tax) Regulations 1999 provide for various offences and penalties for non-compliance with the Act and Regulations. For example, section 27 of the GST Act imposes a penalty of 100 penalty units (currently AUD 11,000) for each offence of failing to comply with certain obligations under the Act, while section 28 imposes a penalty of 250 penalty units (currently AUD 27,500) for each offence of making a false or misleading statement. Similarly, section 43 of the GST Regulations imposes a penalty of 10 penalty units (currently AUD 1,100) for each offence of failing to comply with certain requirements under the Regulations. These penalties may be increased in certain circumstances, such as where the offence is committed recklessly or negligently, or where the offender has previously been convicted of a similar offence. In addition to these penalties, the Commissioner of Taxation may also take legal action to recover unpaid taxes and interest, and may impose further penalties or sanctions in certain circumstances.