Notice of Rulings 6 April 2022

Overview

The Taxation Administration Act 1953, enacted by the Parliament of Australia, provides the framework for the administration of Australian taxation laws, ensuring consistency, fairness, and transparency in the tax system. Among the various public rulings and technical decisions issued under this Act is the Notice of Rulings dated 6 April 2022, which includes several rulings and draft determinations that address specific tax issues and provide clarity to taxpayers. This notice was issued by the Acting Commissioner of Taxation, Jeremy Hirschhorn, under subsection 358-5(4) of Schedule 1 to the Act. These rulings cover topics such as the tax consequences for entities subscribing to Australia and New Zealand Banking Group Limited Capital Notes 7, the fringe benefits tax implications of providing employees with the use of electric bicycles under a salary packaging arrangement, the income tax implications of the demutualisation of Eftpos Payments Australia Limited, and various interpretations of the application of the 'connected with' concept and public entity exception in the context of aggregated turnover. The policy objective of these rulings is to provide certainty and guidance to taxpayers and the Commissioner of Taxation in interpreting and applying complex tax provisions.

Scope and Application

The notifiable instrument F2022N00091, issued by the Acting Commissioner of Taxation Jeremy Hirschhorn on 6 April 2022, notifies the public of several rulings and determinations concerning various tax issues that have been released under the authority of subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953. These rulings and determinations are designed to provide clarity and guidance on specific tax consequences and interpretations of the law as it applies to particular entities and transactions. The rulings cover a range of topics including the tax implications for entities subscribing to and acquiring Australia and New Zealand Banking Group Limited Capital Notes 7, the fringe benefits tax consequences of employers providing their employees with the use of an electric bicycle, and the income tax consequences of the demutualisation of Eftpos Payments Australia Limited for specified members. Additionally, the determinations address the application of certain concepts and exceptions under the Income Tax Assessment Act 1997, such as the ‘connected with’ concept and the public entity exception, in relation to corporate limited partnerships, partnerships, foreign hybrids, and non-entity joint ventures. The rulings and determinations are applicable within specific timeframes, and in some cases, they provide guidance both before and after their issuance dates.

Key Provisions

The notifiable instrument F2022N00091, issued by the Acting Commissioner of Taxation, Jeremy Hirschhorn, contains public rulings that provide guidance on specific tax matters. These rulings include CR 2022/34, which addresses the tax consequences for entities subscribing to and acquiring Australia and New Zealand Banking Group Limited Capital Notes 7, effective from 1 July 2021 to 30 June 2032. Another ruling, CR 2022/35, pertains to the fringe benefits tax implications for employers providing electric bicycles to employees through a salary packaging arrangement with Urban Mobility Pty Ltd, from 1 April 2021 to 31 March 2026. CR 2022/36 outlines the income tax consequences of the demutualisation of Eftpos Payments Australia Limited for specified members, applicable from 1 July 2021 to 30 June 2022. Additionally, Technical Determinations (TD) TD 2022/5, TD 2022/6, and TD 2022/7 provide the Commissioner’s views on the application of the ‘connected with’ concept and the public entity exception to the indirect control test in relation to corporate limited partnerships, public entities, and partnerships, foreign hybrids, and non-entity joint ventures, respectively, with effect from both before and after their issuance dates. The obligations and requirements imposed by these rulings include the necessity for entities to adhere to the specified tax consequences outlined for subscribing to and acquiring ANZ Capital Notes 7, for employers to correctly account for fringe benefits tax when providing electric bicycles to employees, and for specified members of Eftpos Payments Australia Limited to be aware of the income tax consequences of the demutualisation process. Furthermore, these rulings require that taxpayers and their advisors understand and apply the Commissioner’s views on the ‘connected with’ concept and the public entity exception to the indirect control test, impacting various types of entities such as corporate limited partnerships, public entities, partnerships, foreign hybrids, and non-entity joint ventures. Failure to comply with the provisions of these rulings may result in adverse tax consequences, including additional taxes, penalties, or interest. The specific civil or criminal consequences for non-compliance are not detailed within the notifiable instrument but are generally in accordance with the provisions of the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953. These acts provide for various penalties, including fines, interest on unpaid taxes, and potential prosecution for serious breaches. The maximum penalties can vary depending on the nature and severity of the breach but may include substantial fines and imprisonment for criminal offences such as tax evasion or fraud.