Notice of Rulings 28 July 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 |
LCR 2021/2 | Non-arm’s length income – expenditure incurred under a non‑arm’s length arrangement | This Ruling provides legislative guidance and greater certainty to taxpayers to clarify how the amendments to section 295‑550 of the Income Tax Assessment Act 1997 operate in a scheme where the parties do not deal with each other at arm’s length and the trustee of a complying superannuation entity incurs non‑arm’s length expenditure (or where expenditure is not incurred) in gaining or producing ordinary or statutory income. The amendments apply in relation to income derived in the 2018–19 income year and later income years, regardless of whether the scheme was entered into before 1 July 2018. This Ruling applies from 1 July 2018. |
CR 2021/49 | Cassini Resources Limited – demerger and scrip for scrip roll-over | This Ruling sets out the tax consequences for holders of units in Cassini Resources Limited that exchanged their units for units in OZ Minerals Limited. This Ruling applies from 1 July 2020 to 30 June 2021. |
CR 2021/50 | Woolworths Group Limited – demerger of Endeavour Group Limited | This Ruling sets out the tax consequences of the demerger of Endeavour Group Limited by Woolworths Group Limited, which was implemented on 1 July 2021. This Ruling applies from 1 July 2020 to 30 June 2022. |
CR 2021/51 | Australian Vintage Ltd – return of capital and share consolidation | This Ruling sets out the tax consequences of the return of share capital by Australian Vintage Ltd and the consolidation of ordinary shares in Australian Vintage Ltd. This Ruling applies from 1 July 2021 to 30 June 2022. |
CR 2021/52 | Intelligent Investor Australian Growth Fund – scrip for scrip roll-over | This Ruling sets out the tax consequences for holders of units in the Intelligent Investor Australian Growth Fund that exchanged their units for units in the Intelligent Investor Australian Equity Growth Fund. This Ruling applies from 1 July 2020 to 30 June 2021. |
Overview
The Notice of Rulings 2021 issued by the Commissioner of Taxation, Chris Jordan, under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953, aims to provide legislative guidance and certainty to taxpayers on various specific tax matters. These rulings, available from ato.gov.au/law, cover topics such as the tax treatment of non-arm’s length income and expenditure in superannuation entities, the tax implications of corporate demergers and share consolidations, and the tax consequences of exchanging units in certain investment funds. The purpose of these rulings is to clarify the application of the law in these complex situations, ensuring taxpayers understand their obligations and rights under the Income Tax Assessment Act 1997. The rulings apply to specified periods ranging from 2018 to 2022, reflecting the need for timely and precise tax guidance in these evolving financial landscapes.
Scope and Application
The Notifiable Instrument F2021N00175 issued on 28 July 2021 by the Commissioner of Taxation under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953, provides public rulings on various tax matters that offer legislative guidance and clarity to taxpayers. The rulings pertain to specific scenarios such as non-arm's length income incurred by the trustee of a complying superannuation entity, the demerger of entities like Cassini Resources Limited and Woolworths Group Limited, the return of capital and share consolidation by Australian Vintage Ltd, and the scrip for scrip roll-over of units in the Intelligent Investor Australian Growth Fund. These rulings apply to relevant taxpayers and entities involved in these transactions, providing them with certainty regarding the tax implications associated with these specific arrangements. Each ruling is effective from a particular date and continues to apply until a specified end date, ensuring that taxpayers are aware of the timeframe during which the ruling is applicable. The rulings extend the reach of the Commissioner's legislative guidance to taxpayers, entities, and transactions within the scope of the specified arrangements, thereby enhancing compliance and understanding of tax obligations.
Key Provisions
The main operative sections of Notice of Rulings F2021N00175, issued by the Commissioner of Taxation, detail several public rulings designed to provide legislative guidance and clarity to taxpayers regarding specific tax scenarios. For instance, Ruling LCR 2021/2 (section 1) addresses non-arm’s length income and expenditure incurred by the trustee of a complying superannuation entity under non-arm’s length arrangements, effective from 1 July 2018. Similarly, Ruling CR 2021/49 (section 2) concerns the tax consequences for holders of units in Cassini Resources Limited exchanging them for units in OZ Minerals Limited, applicable from 1 July 2020 to 30 June 2021. Ruling CR 2021/50 (section 3) deals with the demerger of Endeavour Group Limited by Woolworths Group Limited, with an effective period from 1 July 2020 to 30 June 2022. Ruling CR 2021/51 (section 4) addresses the tax consequences of the return of capital and share consolidation by Australian Vintage Ltd, applicable from 1 July 2021 to 30 June 2022. Finally, Ruling CR 2021/52 (section 5) sets out the tax consequences for holders of units in the Intelligent Investor Australian Growth Fund exchanging their units for units in the Intelligent Investor Australian Equity Growth Fund, effective from 1 July 2020 to 30 June 2021.
The obligations imposed by these rulings on the parties or entities they govern include providing clear guidelines and certainty for taxpayers in specific circumstances. For instance, taxpayers dealing with non-arm’s length arrangements involving superannuation entities must understand and comply with the provisions outlined in Ruling LCR 2021/2. Similarly, holders of units in Cassini Resources Limited, as mentioned in Ruling CR 2021/49, must be aware of the tax implications when exchanging their units for units in OZ Minerals Limited. Ruling CR 2021/50 requires Woolworths Group Limited and its shareholders to be aware of the tax consequences of the demerger of Endeavour Group Limited. For taxpayers involved in the return of capital and share consolidation by Australian Vintage Ltd, Ruling CR 2021/51 provides the necessary guidance. Finally, holders of units in the Intelligent Investor Australian Growth Fund exchanging their units for units in the Intelligent Investor Australian Equity Growth Fund must adhere to the tax implications detailed in Ruling CR 2021/52.
Failure to comply with the provisions of these rulings can result in various civil and criminal consequences. While the specific penalties are not detailed in the Notice of Rulings, general tax legislation would apply, potentially leading to penalties for non-compliance. These could include fines, interest on unpaid taxes, and, in severe cases, prosecution for tax evasion or fraud. The exact penalties would depend on the nature and extent of the non-compliance, as well as any relevant tax legislation in force at the time. It is essential for taxpayers to understand and adhere to the rulings to avoid these potential consequences.