Notice of Rulings 21 April 2021

Overview

The Notice of Rulings 21 April 2021 was issued under the Taxation Administration Act 1953 by the Commissioner of Taxation, Chris Jordan. This notifiable instrument addresses specific tax consequences and applications relevant to corporate arrangements and investments. The public rulings aim to provide clarity and certainty to taxpayers regarding their obligations and entitlements under the tax law, ensuring that they are well-informed about the tax implications of their transactions. This notice includes rulings on the tax consequences for shareholders of RXP Services Limited in relation to a scheme of arrangement and special dividend, as well as the tax treatment of entities subscribing for CommBank PERLS XIII Capital Notes issued by the Commonwealth Bank of Australia. Additionally, it corrects an erratum concerning development lease arrangements with government agencies, ensuring that taxpayers have the most accurate information possible. These rulings and errata are intended to assist taxpayers in complying with their tax obligations while providing the Commissioner with the opportunity to clarify complex tax issues.

Scope and Application

The Commissioner of Taxation, Chris Jordan, has issued several public rulings and an erratum that clarify the tax implications of specific financial arrangements for entities and individuals involved. The rulings and erratum are issued under the authority of subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953. CR 2021/28 pertains to the tax consequences for shareholders of RXP Services Limited who sold their shares under a scheme of arrangement announced on 11 November 2020, and applies from 1 July 2020 to 30 June 2021. CR 2021/29 addresses the tax treatment of entities subscribing for and acquiring CommBank PERLS XIII Capital Notes issued by the Commonwealth Bank of Australia, and is applicable from 1 July 2020 to 30 June 2030. The erratum, GSTR 2015/2, corrects a previous erratum concerning development lease arrangements with government agencies and applies from 31 March 2021. These rulings and erratum are intended to provide clarity on specific tax issues and are binding on the Commissioner of Taxation and the entities and individuals to whom they apply, subject to any applicable exclusions, exemptions, or thresholds within the rulings themselves. The Commissioner retains the right to extend or restrict the application of these rulings through subordinate instruments.

Key Provisions

The Commissioner of Taxation, Chris Jordan, has issued public rulings and an erratum under the Taxation Administration Act 1953, with the information accessible via the Australian Taxation Office (ATO) website. The main provisions include the rulings CR 2021/28 and CR 2021/29, as well as an erratum to GSTR 2015/2. Ruling CR 2021/28 pertains to the tax implications for shareholders of RXP Services Limited who sold their shares under a specific scheme of arrangement, effective from 1 July 2020 to 30 June 2021. Similarly, Ruling CR 2021/29 details the tax treatment for entities that subscribed to and acquired CommBank PERLS XIII Capital Notes from the Commonwealth Bank of Australia, with applicability from 1 July 2020 to 30 June 2030. The erratum, GSTR 2015/2, corrects the date of effect for a previous erratum to Addendum GSTR 2015/2A, now effective from 31 March 2021. The rulings and erratum impose specific obligations on the relevant taxpayers and entities. For CR 2021/28, shareholders of RXP Services Limited are required to adhere to the tax consequences outlined in the ruling when selling their shares under the scheme of arrangement. Similarly, entities that subscribed to and acquired CommBank PERLS XIII Capital Notes must comply with the tax provisions specified in CR 2021/29. The erratum, GSTR 2015/2, mandates that taxpayers adjust their calculations to reflect the corrected date of effect for the previous erratum regarding development lease arrangements with government agencies. There are no explicit offences, penalties, or civil/criminal consequences mentioned in the text regarding the breach of these rulings or erratum. However, it is important for taxpayers and entities to comply with the specified provisions to avoid any potential tax liabilities or disputes with the ATO. Non-compliance with tax rulings or errata could lead to penalties under the relevant tax legislation, including interest and fines. It is essential for taxpayers to seek professional advice to ensure adherence to these rulings and errata to mitigate any potential tax risks.