Notice of Rulings 17 February 2021
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 |
TR 2021/1 | Income tax: when are deductions allowed for employees’ transport expenses? | This Ruling provides guidance on when an employee can deduct transport expenses under section 8-1 of the Income Tax Assessment Act 1997. It explains that generally, transport expenses for travel between home and a regular place of work do not have the required connection to employment income and are not deductible. In contrast, transport expenses incurred when travelling between work locations are generally deductible provided neither location is the employee’s home. This Ruling applies both before and after its date of issue. |
CR 2021/14 | Metgasco Ltd – return of capital by way of in specie distribution | This Ruling sets out the tax consequences of the return of capital paid on 29 December 2020 by Metgasco Ltd. This Ruling applies from 1 July 2020 to 30 June 2021. |
Overview
The Notice of Rulings issued on 17 February 2021 by the Commissioner of Taxation, Chris Jordan, under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953, introduces two public rulings that provide clarity on specific tax issues. These rulings are TR 2021/1, which addresses the circumstances under which employees can deduct transport expenses for travel between work locations, and CR 2021/14, which outlines the tax implications of a return of capital by way of in specie distribution by Metgasco Ltd. The purpose of these rulings is to ensure taxpayers understand their obligations and entitlements under the relevant legislation, thus promoting compliance and reducing disputes. Copies of these rulings are available on the Australian Taxation Office website, and they apply to specified periods as outlined in each ruling.
Scope and Application
The Notifiable Instrument F2021N00032 issued on 17 February 2021 provides public rulings under the Taxation Administration Act 1953, aimed at clarifying specific aspects of income tax law. The rulings outlined in this instrument pertain to the deduction of employees' transport expenses and the tax consequences of a capital return by Metgasco Ltd. The rulings apply to individuals and entities engaged in employment and capital transactions respectively, within the Australian jurisdiction. These rulings are intended to offer clarity and guidance on the tax implications of certain activities, thereby ensuring compliance with the Income Tax Assessment Act 1997. The Commissioner of Taxation, Chris Jordan, has made these rulings publicly available to assist taxpayers in understanding their obligations and entitlements under the law. The instrument’s reach is national, applying across all states and territories of Australia, and it does not specify any exclusions or exemptions beyond the scope of the rulings themselves.
Key Provisions
The Commissioner of Taxation, Chris Jordan, has issued two public rulings that provide detailed guidance on specific aspects of the Australian Taxation Law. The first, TR 2021/1 (Tax Ruling 2021/1), addresses the circumstances under which employees can claim deductions for transport expenses incurred when travelling between work locations, as outlined in section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). According to this ruling, employees generally cannot claim deductions for transport expenses when travelling between their home and their regular place of work, as these expenses do not have the necessary connection to employment income. Conversely, if an employee incurs transport expenses while travelling between different work locations, these expenses are generally deductible, provided neither location is the employee’s home. This ruling is applicable both before and after its date of issue, ensuring that taxpayers have clarity on their rights to deductions in this area of taxation.
The second ruling, CR 2021/14 (Commissioner’s Ruling 2021/14), concerns the tax implications of a return of capital by way of an in specie distribution made by Metgasco Ltd on 29 December 2020. This ruling explains the tax consequences of such distributions, providing necessary guidance for both the company and its shareholders. It is applicable from 1 July 2020 to 30 June 2021, covering the period during which the distribution took place and its subsequent tax treatment.
These rulings impose specific obligations on the parties they govern. For employees claiming transport expense deductions, the ruling mandates that they must ensure their expenses relate to travel between work locations and not between their home and regular place of work. For Metgasco Ltd and its shareholders, the ruling requires adherence to the specified tax consequences of the in specie distribution, ensuring that any relevant tax liabilities are properly accounted for and reported within the stipulated period.
Failure to comply with the provisions of these rulings could lead to significant consequences. While the specific penalties for non-compliance are not detailed within the text of the notifiable instrument itself, breaches of Australian tax law generally attract penalties and interest as stipulated in the ITAA 1997. Additionally, persistent or deliberate non-compliance could result in more severe penalties, including criminal charges in cases of fraud or serious tax evasion. The maximum penalties for tax-related offences can vary widely, depending on the nature and extent of the breach, but they can include substantial fines and, in severe cases, imprisonment.