Notice of Rulings

Overview

The Commissioner of Taxation, Chris Jordan, has issued two rulings to clarify the taxation treatment of specific employment termination payment schemes. CR 2017/31 addresses payments made to Australian Football League players who leave their football clubs, aiming to ensure compliance with income tax laws for these payments. This ruling came into effect on 31 May 2017 and will remain in force for up to three years. Similarly, CR 2017/32 outlines the taxation treatment for employees of the Electrical Trades Union WA under the 'Electrical Trades Union WA Early Voluntary Retirement Scheme 2017', and is applicable from 8 June 2017 to 30 June 2019. These rulings aim to provide clarity and guidance to both the players and the union, ensuring they meet their tax obligations accurately.

Scope and Application

The Commissioner of Taxation has issued two rulings under the Commonwealth's income tax laws to clarify the tax treatment of specific employment termination payments. Ruling CR 2017/31 pertains to the Australian Football League Players’ Association Incorporated and addresses the tax implications for players leaving their football club and receiving a payment under the scheme. This ruling applies from 31 May 2017 and is effective for up to three years thereafter, providing clarity on the tax treatment of such payments for the specified period. Similarly, Ruling CR 2017/32 pertains to the ‘Electrical Trades Union WA Early Voluntary Retirement Scheme 2017’ and outlines the tax treatment for employees of the Electrical Trades Union WA. This ruling applies from 8 June 2017 to 30 June 2019, providing a clear framework for the tax implications of early voluntary retirement payments within this timeframe. Both rulings are intended to offer certainty to affected parties regarding the tax treatment of specific employment termination payments, and they are accessible via the Australian Taxation Office's website.

Key Provisions

The key operative sections of the Commissioner of Taxation Rulings CR 2017/31 and CR 2017/32 detail the specific positions the Commissioner has taken regarding income tax liabilities for certain employment termination payments. CR 2017/31 (paragraphs 1 to 16) provides clarification on the tax treatment for payments made to Australian Football League players under the Australian Football League Players' Association Incorporated scheme. The Ruling applies from 31 May 2017 and is effective for up to three years thereafter. CR 2017/32 (paragraphs 1 to 10) outlines the Commissioner’s position on payments made to employees of the Electrical Trades Union WA under the Early Voluntary Retirement Scheme 2017. This Ruling applies from 8 June 2017 to 30 June 2019. The obligations and requirements imposed by these Rulings on the parties involved are primarily centred on the accurate reporting and taxation of the specified employment termination payments. Employers are required to withhold and remit the correct amount of tax from these payments, as determined by the Commissioner's Rulings. Furthermore, employees must include these payments in their assessable income and declare them in their tax returns. Both Rulings provide detailed guidance on how these payments should be treated for tax purposes, ensuring that all parties are aware of their obligations and the tax implications of these payments. In terms of penalties and consequences for non-compliance, the Rulings do not explicitly outline specific criminal or civil penalties for breach. However, failure to adhere to the tax obligations set out in the Rulings could result in general penalties for non-compliance under the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. These penalties can include interest on unpaid tax, general interest charges, and penalties for late lodgment or payment. In cases of deliberate or negligent non-compliance, more severe penalties, including fines and potential criminal charges, may apply. The maximum penalties for tax evasion can result in fines of up to $22,000 and/or imprisonment for up to five years, as per the relevant Acts. It is essential for employers and employees to follow the guidelines set out in these Rulings to avoid any potential penalties or legal repercussions.