Notice of Rulings 9 February 2022
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 |
TD 2022/1 | Income tax: commercial debt forgiveness – does the exclusion for debts forgiven for reasons of natural love and affection require that the creditor be a natural person? | This Ruling provides that paragraph 245‑40(e) of the Income Tax Assessment Act 1997 excludes a debt forgiven for reasons of natural love and affection from the application of the commercial debt forgiveness provisions, where the creditor is a natural person. |
CR 2022/5 | AIA Australia Limited – provision of free membership, allocation of points, and free or discounted goods and services to members of a health and wellness program | This Ruling sets out fringe benefits tax consequences of the provision of free membership of a health and wellness program, the allocation of points, and receipt of free or discounted goods and services, to members of the AIA Vitality Program. This Ruling applies from 1 April 2020 to 31 March 2024. |
CR 2022/6 | Bingo Industries Limited – scheme of arrangement and special dividend | This Ruling sets out the income tax consequences of the special dividend paid on 28 July 2021 and the Scheme of Arrangement implemented by Bingo Industries Limited on 5 August 2021. This Ruling applies from 1 July 2021 to 30 June 2022. |
CR 2022/7 | RAM Australia Retail Property Fund
– return of capital and formation of a stapled security | This Ruling sets out the income tax consequences for the unit holders of the RAM Australia Retail Property Fund who were entitled to receive a return of capital from the Trustee of the RAM Australia Retail Property Fund which was satisfied by those unit holders acquiring units in the RAM Australia Medical Property Fund, followed by the stapling of the RAM Australia Retail Property Fund units and RAM Medical Fund units. This Ruling applies from 1 July 2021 to 30 June 2022. |
CR 2022/8 | RAM Australia Medical Property Fund – return of capital and formation of a stapled security | This Ruling sets out the income tax consequences for the unit holders of the RAM Australia Medical Property Fund who were entitled to receive a return of capital from the Trustee of RAM Medical Fund which was satisfied by those unit holders acquiring units in the RAM Australia Retail Property Fund, followed by the stapling of the RAM Medical Fund units and RARPF units. This Ruling applies from 1 July 2021 to 30 June 2022. |
CR 2022/9 | Afterpay Limited – scrip for scrip roll‑over | This Ruling sets out the income tax consequences for the holders of ordinary shares in Afterpay Limited in relation to the acquisition of those shares by Lanai (AU) 2 Pty Ltd on 1 February 2022. This Ruling applies from 1 July 2021 to 30 June 2022. |
CR 2022/10 | Chalice Mining Limited – demerger of Falcon Metals Ltd | This Ruling sets out the income tax consequences of the demerger of Falcon Metals Ltd by Chalice Mining Limited which was implemented on 15 December 2021. This Ruling applies from 1 July 2021 to 30 June 2022. |
Overview
The Taxation Administration Act 1953 (TAA) was enacted to streamline and centralise the administration of taxation laws, ensuring compliance and reducing administrative burdens on taxpayers. The Act provides the framework for the Commissioner of Taxation to issue rulings and guidelines to clarify and inform taxpayers of their obligations under the tax laws. The TAA empowers the Commissioner to issue public rulings to address specific tax issues or transactions, thereby providing certainty and predictability in tax administration. The policy objective of these rulings is to promote compliance by clarifying the application of tax laws and to provide taxpayers with a clear understanding of their rights and obligations. The TAA also facilitates the dissemination of these rulings to the public, ensuring that taxpayers have access to the information they need to fulfil their tax obligations.
Scope and Application
The Notice of Rulings issued under F2022N00013 pertains to several public rulings concerning specific income tax consequences, and these rulings apply to taxpayers involved in the specified transactions or arrangements. The rulings cover various entities and individuals, such as commercial entities affected by debt forgiveness, members of health and wellness programs, unit holders in property funds, and shareholders in companies undergoing corporate restructuring. These rulings provide clarity on tax implications for the specified transactions and apply from specific dates as outlined in each ruling, generally ranging from 1 July 2021 to 30 June 2022. The rulings are applicable across Australia and are subject to the provisions of the Income Tax Assessment Act 1997, which governs federal income tax matters. The rulings do not specify exclusions, but taxpayers should consider their particular circumstances and seek professional advice to ensure compliance with the relevant tax laws. The Commissioner of Taxation may extend or restrict the application of these rulings through subordinate instruments.
Key Provisions
The Commissioner of Taxation has issued a notifiable instrument under subsection 358-5(4) of Schedule 1 to the Taxation Administration Act 1953, notifying the public of several rulings and their availability for reference at ato.gov.au/law. The primary focus of these rulings is to provide clarity on specific tax matters for various companies and schemes, ensuring taxpayers and tax agents are aware of the tax implications involved. These rulings cover a range of topics from the forgiveness of commercial debts for reasons of natural love and affection (TD 2022/1), to the fringe benefits tax implications of health and wellness programs (CR 2022/5), and the income tax consequences of corporate actions such as schemes of arrangement, dividends, returns of capital, and demergers.
The rulings impose specific obligations on taxpayers and tax agents to ensure compliance with the tax laws as interpreted by the Commissioner of Taxation. For example, businesses offering health and wellness programs must account for the fringe benefits tax implications of their offerings (CR 2022/5). Similarly, entities involved in complex corporate transactions such as mergers, acquisitions, and demergers must understand and apply the income tax consequences as outlined in the respective rulings (CR 2022/6, CR 2022/7, CR 2022/8, CR 2022/9, and CR 2022/10). These obligations include accurately reporting income tax consequences and ensuring that all relevant documentation and calculations are prepared in accordance with the guidance provided in the public rulings.
Failure to comply with the obligations set out in these rulings can result in legal consequences for the parties involved. While the specific penalties for non-compliance are not detailed in the notifiable instrument, the general penalties for breaches of the Income Tax Assessment Act 1997 can include fines and interest on any unpaid tax. In more serious cases, penalties can extend to criminal charges, with maximum penalties varying depending on the nature and extent of the breach. Taxpayers and tax agents are, therefore, advised to adhere closely to the guidance provided in these rulings to avoid potential legal repercussions.