Notice of Rulings, Notice of Addenda

Overview

The Australian Taxation Office, through Commissioner Chris Jordan, has issued several rulings to address specific tax issues and clarify the application of existing tax laws. For example, Ruling CR 2016/12 pertains to employers who are clients of United Airport Parking Pty Ltd and have entered into a Corporate Car Parking Agreement, outlining the Commissioner's position on fringe benefits tax for the provision of private use of a car by these employers. This ruling is designed to provide clarity and guidance for the period from 1 April 2015 to 31 March 2020. Similarly, Ruling CR 2016/13 addresses the tax treatment for holders of ordinary shares in National Australia Bank Limited who participate in a scheme involving the return of capital by way of in specie distribution of shares in CYBG PLC. This ruling applies from 1 July 2015 to 30 June 2016. Additionally, the amendments to Rulings LCG 2015/2 and TR 2014/7 further refine the application of tax laws concerning schemes limiting taxable presence in Australia and the source of foreign currency hedging transactions gains, respectively. These rulings and amendments aim to provide certainty and consistency in the application of the tax law to taxpayers involved in these specific transactions.

Scope and Application

The rulings and addendums set out in the Commissioner of Taxation's notice provide specific guidance on various tax matters, each with its own scope and application. Ruling CR 2016/12 concerns employers who provide the private use of a car they own or lease to an employee or an associate, and who enter into a Corporate Car Parking Agreement with United Airport Parking Pty Ltd. This ruling applies to employers within the specified time frame of 1 April 2015 to 31 March 2020, providing clarity on the fringe benefits tax implications for such arrangements. Ruling CR 2016/13 applies to holders of ordinary shares in National Australia Bank Limited who participate in a specific scheme of return of capital by way of in specie distribution of shares in CYBG PLC, and it is applicable from 1 July 2015 to 30 June 2026. Addendum LCG 2015/2 amends the earlier guidance on section 177DA of the Income Tax Assessment Act 1936, clarifying the meaning of principal purpose in relation to schemes that limit a taxable presence in Australia, and it applies from 18 December 2015. Addendum TR2014/7 provides the Commissioner's view on determining the source of foreign currency hedging transactions gains for the purposes of Division 770 of the Income Tax Assessment Act 1997, and it applies from 1 July 2015. Each of these rulings and addendums serves to offer certainty to taxpayers and the Commissioner regarding the application of the relevant provisions of the Income Tax Assessment Act.

Key Provisions

The primary operative sections of the notice pertain to the rulings and addenda issued by the Commissioner of Taxation. CR 2016/12 (Fringe benefits tax: employers who are clients of United Airport Parking Pty Ltd and who enter into the Corporate Car Parking Agreement) provides the Commissioner's position for employers who offer the private use of a car they own or lease to an employee or associate under a Corporate Car Parking Agreement with United Airport Parking Pty Ltd, effective from 1 April 2015 to 31 March 2020. CR 2016/13 (Income tax: return of capital by way of in specie distribution of shares in CYBG PLC by National Australia Bank Limited) outlines the Commissioner's position for holders of ordinary shares in National Australia Bank Limited who participate in a specified scheme, applicable from 1 July 2015 to 30 June 2016. The Addendum to LCG 2015/2 (Section 177DA of the Income Tax Assessment Act 1936: schemes that limit a taxable presence in Australia) clarifies the meaning of 'principal purpose' within paragraph 9, effective from 18 December 2015. Lastly, the Addendum to TR 2014/7 (Income tax: foreign currency hedging transactions – applying the foreign income tax offset limit under section 770-75 of the Income Tax Assessment Act 1997 and determining the source of foreign currency hedging gains) provides the Commissioner's view on the source of foreign currency hedging transactions gains for the purposes of Division 770 of the Income Tax Assessment Act 1997, effective from 1 July 2015. These rulings and addenda impose specific obligations on the parties and entities they govern. Employers entering into a Corporate Car Parking Agreement with United Airport Parking Pty Ltd must adhere to the Commissioner's position on fringe benefits tax, as outlined in CR 2016/12. Holders of ordinary shares in National Australia Bank Limited must comply with the Commissioner's position on income tax returns of capital, as set forth in CR 2016/13. Entities involved in schemes that limit a taxable presence in Australia must understand and comply with the clarified meaning of 'principal purpose' within paragraph 9 of Section 177DA of the Income Tax Assessment Act 1936, as amended by the Addendum to LCG 2015/2. Lastly, entities engaged in foreign currency hedging transactions must apply the foreign income tax offset limit and determine the source of foreign currency hedging gains in accordance with the Addendum to TR 2014/7. Breach of the obligations and requirements imposed by these rulings and addenda can result in various civil and criminal consequences. While specific offences and penalties are not detailed in the notice, it is known that non-compliance with Australian tax laws can result in civil penalties, including fines and interest on unpaid taxes. In more severe cases, criminal charges may be pursued, leading to imprisonment. The exact penalties depend on the nature and severity of the breach, as well as any mitigating or aggravating factors. It is essential for parties and entities governed by these rulings and addenda to carefully adhere to the Commissioner's positions to avoid potential penalties and consequences.