Notice of Rulings 22 December 2021

Overview

The Commissioner of Taxation has issued notice of public rulings under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953, providing guidance on various aspects of income tax law. The rulings, accessible from ato.gov.au/law, address the temporary full expensing of depreciating assets, research and development tax offsets, and the application of the ‘at risk’ rule to JobKeeper payments. Additionally, the rulings cover the income tax implications of payments made by the Australian Sports Commission under the dAIS athlete grant scheme and a scrip for scrip roll-over arrangement involving Western I.V.F. Pty Ltd. The Commissioner has also issued an addendum extending the end date of a previous ruling on grants provided by the Australian Sports Commission under dAIS to 30 June 2023. These rulings aim to clarify the application of tax provisions and ensure taxpayers and their advisers understand their obligations.

Scope and Application

The Notifiable Instrument F2021N00326 issued by the Commissioner of Taxation, Chris Jordan, concerns public rulings and an addendum under the Taxation Administration Act 1953. These rulings and the addendum primarily address specific aspects of income tax law, providing clarity and guidance to taxpayers and entities. The rulings cover a range of topics, including the temporary full expensing of depreciating assets, the 'at risk' rule in the research and development regime, JobKeeper payments in relation to research and development expenditure, and the income tax consequences of grants provided by the Australian Sports Commission. The rulings apply to taxpayers and entities involved in these specific activities, with some rulings applying from certain dates up to 30 June 2026, while others apply both before and after their issuance. The addendum modifies an existing ruling to extend its application period. These rulings and the addendum aim to ensure taxpayers and entities understand their tax obligations and rights in relation to the specified activities.

Key Provisions

The Commissioner of Taxation, Chris Jordan, has issued several public rulings and one addendum under the Taxation Administration Act 1953. LCR 2021/3 pertains to the temporary full expensing of depreciating assets, introduced by the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 and the Treasury Laws Amendment (2020 Measures No. 6) Act 2020. This ruling provides guidance on the application of these provisions and applies both before and after its issuance. TR 2021/5 addresses the ‘at risk’ rule in the research and development (R&D) tax offset regime, preventing R&D entities from deducting expenditure that is not at risk. This ruling also applies both before and after its date of issue. TD 2021/9 details how the ‘at risk’ rule applies to JobKeeper payments received by R&D entities under the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020. Like the other rulings, this determination applies both before and after its issuance. These rulings and determinations impose specific obligations on the parties they govern. For instance, LCR 2021/3 requires taxpayers to correctly apply the temporary full expensing provisions for depreciating assets. TR 2021/5 requires R&D entities to ensure that any expenditure they claim as a tax offset is genuinely at risk. TD 2021/9 instructs how JobKeeper payments should be treated for tax purposes when they result from R&D expenditure. CR 2021/100 and CR 2021/101 provide specific guidance on the tax consequences of payments under the dAIS athlete grant scheme and a scrip for scrip arrangement, respectively. These rulings apply to the specified periods and require taxpayers to adhere to the outlined tax treatments. For breaches of the provisions detailed in these rulings and determinations, the penalties can vary. Under the Taxation Administration Act 1953, penalties for non-compliance can include fines, imprisonment, or both, depending on the severity and intent of the breach. For example, knowingly making a false statement or representation for tax purposes can result in significant penalties. The maximum penalties for serious tax offences can include fines of up to $18,000 for individuals and much higher amounts for corporations, along with potential imprisonment terms. Additionally, civil penalties can apply for non-compliance with the income tax laws, including penalties for failure to lodge tax returns or provide necessary information. The exact penalties depend on the specific breach and the discretion of the court.