Notice of Rulings

Overview

The Commissioner of Taxation issued a ruling in 2017 to clarify the fringe benefits tax (FBT) implications for employers who enter into a Corporate Bailment Agreement with Westhill Pty Ltd as trustee for the ASP Trust trading as Airport Security Parking. This ruling, numbered CR 2017/8, applies to employers who provide private use of a car that they own or lease to an employee or an associate of an employee. This ruling was enacted to address the specific issue of fringe benefits tax liabilities in the context of such corporate agreements, ensuring that employers have clear guidance on their tax obligations. The ruling applies from 1 April 2016, providing a definitive interpretation of the relevant provisions to affected taxpayers. Additionally, the Commissioner issued ruling CR 2017/9, which outlines the Commissioner's position for ordinary shareholders of CMI Limited in relation to an off-market share buy-back, applicable from 1 July 2016 to 30 June 2017. Both rulings aim to provide clarity and certainty in the application of income tax law to specific scenarios.

Scope and Application

The Ruling CR 2017/8 pertains to employers who are clients of Westhill Pty Ltd as trustee for the ASP Trust trading as Airport Security Parking and who enter into a Corporate Bailment Agreement. The scope of this Ruling is specifically targeted at employers who provide private use of a car that they own or lease to an employee, or an associate of an employee, under the specified arrangement. This legislation applies to the Commonwealth jurisdiction and sets out the Commissioner’s position regarding fringe benefits tax implications from 1 April 2016. The Ruling provides clarity and guidance on the tax treatment for such arrangements, ensuring that employers understand their obligations under the Fringe Benefits Tax Assessment Act 1986. The exclusions or exemptions, if any, are not detailed in the Ruling itself but would typically be found in the relevant taxation acts and subordinate instruments. The Ruling CR 2017/9 addresses the income tax implications for ordinary shareholders of CMI Limited, particularly in the context of an off-market share buy-back. This Ruling applies from 1 July 2016 to 30 June 2017, providing the Commissioner’s position on the tax treatment of such transactions during this period. The scope of this Ruling is limited to the Commonwealth jurisdiction and is intended to clarify the tax consequences for shareholders involved in the specified share buy-back arrangement. While the Ruling itself does not detail specific exclusions or exemptions, these would be derived from the broader provisions of the Income Tax Assessment Act 1997 and any relevant subordinate legislation.

Key Provisions

The main operative sections of this Ruling pertain to fringe benefits tax (FBT) and income tax, particularly in relation to specific transactions. CR 2017/8 addresses employers who provide private use of a car they own or lease to an employee or an associate and enter into a Corporate Bailment Agreement with Westhill Pty Ltd as trustee for the ASP Trust trading as Airport Security Parking (section 1). This Ruling applies from 1 April 2016, providing clarity on the FBT implications of such arrangements (section 2). CR 2017/9 focuses on the income tax position of ordinary shareholders of CMI Limited, specifically in relation to an off-market share buy-back (section 1). This Ruling applies from 1 July 2016 to 30 June 2017, outlining the tax treatment of these transactions for shareholders (section 2). The Rulings impose specific obligations and requirements on the parties involved. Employers who provide private use of a car and enter into a Corporate Bailment Agreement with Westhill Pty Ltd must adhere to the guidelines set out in CR 2017/8 (section 3). This includes ensuring that the terms of the Corporate Bailment Agreement comply with the requirements for FBT purposes, particularly in relation to the provision of fringe benefits. For shareholders of CMI Limited, CR 2017/9 imposes obligations regarding the tax treatment of the off-market share buy-back, ensuring that any income or deductions arising from the transaction are properly accounted for and reported in their tax returns (section 4). Failure to comply with the provisions of these Rulings can result in various consequences. Under CR 2017/8, if employers do not correctly apply the FBT provisions in relation to the provision of a car and the Corporate Bailment Agreement, they may be subject to penalties for underpayment of FBT. The penalties can include interest on the unpaid FBT and additional penalties for late lodgement or payment (section 5). Similarly, under CR 2017/9, if shareholders of CMI Limited do not correctly account for the income or deductions arising from the off-market share buy-back, they may face penalties for underpayment of tax, including interest and additional penalties for late lodgement or payment (section 6). The specific penalties are not detailed in the text but generally follow the guidelines set out in the Income Tax Assessment Act 1997.