Notice of Rulings 5 October 2022

Overview

The Commissioner of Taxation, Chris Jordan, issued a notifiable instrument under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953 on 5 October 2022, detailing public rulings available for review on the ATO website. The instrument includes a new Determination, TD 2022/14, addressing the inclusion of a non-contingent liability to pay a specified amount in the cost base of a capital gains tax (CGT) asset, and its implications under subsection 110-45(2) of the Income Tax Assessment Act 1997. This Determination applies retroactively and prospectively from its issuance date. Additionally, the instrument announces the withdrawal of the previous Ruling TR 98/17, which concerned the residency status of individuals entering Australia, effective from 6 October 2022. The purpose of these rulings and withdrawals is to provide clarity and update taxpayers on the current legislative requirements regarding specific tax scenarios.

Scope and Application

The Commissioner of Taxation, Chris Jordan, issued a notifiable instrument under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953 on 5 October 2022, notifying the public of certain rulings and their withdrawal. The public rulings, which can be accessed on the ATO website, include a new Determination, TD 2022/14, which provides clarification on the application of subsection 110-45(2) of the Income Tax Assessment Act 1997 when a non-contingent liability to pay a specified amount is included in the cost base of a capital gains tax (CGT) asset. This Determination applies to taxpayers who hold CGT assets with such liabilities and is effective both before and after its issuance date. Additionally, the instrument announces the withdrawal of Taxation Ruling TR 98/17, which previously provided guidance on the residency status of individuals entering Australia, effective from 6 October 2022. The rulings apply to individuals and entities subject to the Income Tax Assessment Act 1997 and are part of the Commonwealth's legislative framework. The notifiable instrument itself does not detail specific exclusions, exemptions, or thresholds but refers to the detailed provisions within the referenced acts and rulings.

Key Provisions

The Commissioner of Taxation has issued public rulings through a notifiable instrument under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953. The rulings, accessible from ato.gov.au/law, include a new public ruling and the withdrawal of an existing ruling. The new ruling, TD 2022/14, pertains to the application of subsection 110-45(2) of the Income Tax Assessment Act 1997 when a non-contingent liability to pay a specified amount is included in the cost base of a capital gains tax (CGT) asset. This ruling clarifies the circumstances under which such a liability is included in the cost base under subsection 110-25(2) or section 112-35 of the Act and provides guidance on the deduction of that amount (TD 2022/14). This ruling is effective both before and after its issuance date. The obligations imposed by these rulings primarily concern taxpayers who have or may have non-contingent liabilities included in the cost base of their CGT assets. They must ensure that they correctly account for these liabilities in accordance with the guidance provided in TD 2022/14. Additionally, taxpayers who previously relied on the withdrawn ruling, TR 98/17, which dealt with the residency status of individuals entering Australia, must now seek alternative guidance or rulings to determine the residency status of such individuals as this ruling is no longer in effect from 6 October 2022. There are no direct offences or penalties specified in the notifiable instrument itself; rather, the consequences of non-compliance would stem from the general tax laws. For instance, if a taxpayer incorrectly applies the guidance in TD 2022/14 and as a result underpays their taxes, they may face penalties and interest on the shortfall, as per the general provisions of the Income Tax Assessment Act 1998. Similarly, any failure to correctly determine residency status under the withdrawn ruling, TR 98/17, could result in penalties for incorrect tax assessments. The maximum penalties for tax-related offences can vary widely depending on the nature and extent of the non-compliance, but they can include fines and, in severe cases, imprisonment.