Notice of Rulings 13 July 2022
The Commissioner of Taxation, Chris Jordan, gives notice by notifiable instrument under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953 of the following public rulings, copies of which can be obtained from ato.gov.au/law
NOTICE OF RULINGS |
Ruling number | Subject | Brief description |
CR 2022/62 | Totium Pty Ltd – health services provided to employees via The Exec Check program | This Ruling sets out the fringe benefits tax consequences for employers providing their employees with access to Totium Pty Ltd’s The Exec Check program. This Ruling applies from 1 April 2021 to 31 March 2025. |
CR 2022/63 | Crestone Holdings Limited – scheme of arrangement and dividends | This Ruling sets out the income tax consequences of the dividends paid by Crestone Holdings Limited on 2 May 2022 and the scheme of arrangement whereby LGT Holding (Australia) Pty Ltd acquired all of the shares in Crestone Holdings Limited on 12 May 2022. This Ruling applies from 1 July 2021 to 30 June 2027. |
CR 2022/64 | Western Areas Limited – employee share scheme – shares disposed of under scheme of arrangement | This Ruling sets out the income tax consequences for Western Areas Limited employees who participated in the Tax Exempt Share Plan to acquire ordinary shares in Western Areas Limited, which were subsequently disposed of on 20 June 2022. This Ruling applies from 1 July 2019 to 30 June 2022. |
TD 2022/11 | Income tax: Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation’? | This Determination describes when a private company provides financial accommodation within the meaning of section 109D of the Income Tax Assessment Act 1936 where that company is made presently entitled to income of a trust and either that entitlement remains unpaid (an unpaid present entitlement) or the trustee sets aside an amount from the main trust and holds it on a new separate trust (sub-trust) for the private company beneficiary. This Determination applies to trust entitlements arising on or after 1 July 2022. |
NOTICE OF ADDENDUM |
Ruling number | Subject | Brief description |
CR 2022/60 | BHP Group Limited – dividend by way of in specie distribution of Woodside Energy Group Ltd shares | This Ruling has been amended to update the ratio of BHP Group Limited shares. This Addendum applies from 6 July 2022. |
NOTICE OF ERRATUM |
Ruling number | Subject | Brief description |
CR 2022/61 | Minotaur Exploration Ltd – reduction of share capital and scrip for scrip roll-over | This Ruling has been corrected to rectify a certain amount. This Erratum applies from 6 July 2022. |
Overview
The Notice of Rulings issued by the Commissioner of Taxation on 13 July 2022 under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953, presents public rulings that address specific tax issues arising from various corporate arrangements and transactions. These rulings, accessible via ato.gov.au/law, are intended to provide clarity and certainty to taxpayers regarding the tax consequences of their financial dealings. For instance, Ruling CR 2022/62 pertains to the fringe benefits tax implications for employers offering health services through Totium Pty Ltd's The Exec Check program, effective from 1 April 2021 to 31 March 2025. Similarly, Ruling CR 2022/63 addresses the income tax consequences of dividends paid by Crestone Holdings Limited and its acquisition by LGT Holding (Australia) Pty Ltd, applicable from 1 July 2021 to 30 June 2027. The objective of these public rulings is to ensure taxpayers understand their tax obligations and can plan their affairs accordingly, thereby enhancing compliance and reducing disputes.
Scope and Application
The Notifiable Instrument F2022N00164 issued by the Commissioner of Taxation on 13 July 2022 includes various public rulings and determinations aimed at clarifying the tax implications of specific transactions and schemes for businesses and individuals. These rulings apply to entities such as Totium Pty Ltd, Crestone Holdings Limited, and Western Areas Limited, as well as to taxpayers involved in particular transactions or arrangements, such as the provision of health services, dividend distributions, and share acquisitions. The geographic and jurisdictional reach of these rulings is national, as they pertain to entities and transactions occurring within Australia, governed by Commonwealth taxation laws. While the rulings provide guidance on tax treatment, they do not alter existing legislative provisions unless expressly stated. The rulings and determinations are effective for specified periods, ranging from one to six years, and are applicable from the dates mentioned in each ruling or addendum. The Commissioner of Taxation may also issue subordinate instruments to extend or restrict the application of these rulings within the scope of the primary legislation.
Key Provisions
The main provisions of the notice of rulings and notices of addendum and erratum published by the Commissioner of Taxation under the Taxation Administration Act 1953 include several public rulings and determinations that outline specific tax consequences for various corporate transactions and arrangements. These rulings, such as CR 2022/62 regarding Totium Pty Ltd’s The Exec Check program for employees, CR 2022/63 concerning Crestone Holdings Limited’s dividends and scheme of arrangement, and CR 2022/64 regarding Western Areas Limited’s employee share scheme, provide clarity on the fringe benefits tax and income tax implications for the specified periods. Additionally, TD 2022/11 gives guidance on when unpaid present entitlements or amounts held on a sub-trust become 'financial accommodation' under Division 7A of the Income Tax Assessment Act 1936. These rulings and determinations serve to inform taxpayers about their obligations under the tax law and to provide certainty in tax planning for the specified activities.
The Act imposes specific obligations on the entities and individuals affected by these rulings. For instance, employers providing health services to employees via programs like The Exec Check must correctly account for the fringe benefits tax consequences as outlined in Ruling CR 2022/62. Similarly, companies involved in schemes of arrangement, such as Crestone Holdings Limited, must understand and comply with the income tax implications as described in Ruling CR 2022/63. The rulings also require that entities participating in share schemes, like Western Areas Limited, adhere to the tax consequences specified in Ruling CR 2022/64. These obligations are crucial for ensuring that taxpayers accurately report and pay the appropriate taxes, thereby maintaining compliance with the tax laws.
Failure to comply with the provisions of these rulings and determinations may result in various civil and criminal consequences. While the notice does not explicitly state penalties, breaches of tax law generally can lead to penalties, interest on unpaid taxes, and potential legal action by the Australian Taxation Office. The maximum penalties for tax-related offences can vary widely depending on the nature and severity of the breach, but they can include substantial fines and, in some cases, imprisonment for criminal tax offences. It is essential for taxpayers to carefully follow the guidance provided in these rulings to avoid these adverse consequences.