Notice of Rulings, Notice of Addenda

Overview

The Australian Taxation Office has issued several rulings in 2017 to clarify the taxation treatment of specific schemes and transactions. These rulings aim to provide certainty to taxpayers regarding the income tax implications of various arrangements. For instance, Ruling CR 2017/55 addresses the 'ENGIE Loy Yang Early Retirement Scheme 2017', affecting employees of IPM Operation & Maintenance Loy Yang Pty Ltd and International Power (Australia) Pty Ltd. Similarly, Ruling CR 2017/56 pertains to the 'South East Water Corporation Early Retirement Scheme 2017', impacting employees of South East Water Corporation. Ruling CR 2017/57 deals with the scrip-for-scrip roll-over in relation to Charter Hall Long WALE REIT Simplification, covering holders of units in several trusts. Rulings CR 2017/58 and CR 2017/59 provide the Commissioner's position on the employee share schemes related to Arconic Inc. and Alcoa Corporation respectively. Each ruling specifies its effective period and applies to entities within the specified class who entered into the relevant scheme during the term of the ruling. These rulings collectively aim to ensure that taxpayers understand their obligations under the Income Tax Assessment Act 1997 in the context of these particular transactions and schemes.

Scope and Application

The Commissioner of Taxation has issued several rulings that detail the position of the Commissioner on specific income tax matters, which apply to particular entities or classes of entities involved in certain transactions or schemes. Ruling CR 2017/55 pertains to employees of IPM Operation & Maintenance Loy Yang Pty Ltd and International Power (Australia) Pty Ltd who receive payments under the 'ENGIE Loy Yang Early Retirement Scheme 2017'. This ruling applies from 23 August 2017 to 31 August 2019 and extends to all entities within the specified class who entered into the scheme during this period. Similarly, Ruling CR 2017/56 addresses the South East Water Corporation Early Retirement Scheme 2017, applying from 23 August 2017 to 28 February 2018 and thereafter to relevant entities that entered into the scheme during the ruling period. Ruling CR 2017/57 and CR 2017/58 focus on the scrip for scrip roll-over of various trusts and the Arconic Inc. Employee Share Scheme, respectively, both applying from 1 July 2016 to 30 June 2019 and 30 June 2017, with extensions to relevant entities that entered into these schemes during the ruling periods. Ruling CR 2017/59 relates to the Alcoa Corporation – Separation from Alcoa Inc. Employee Share Scheme, with similar application dates and extensions. Additionally, Addendum PR 2014/14 amends the Product Ruling PR 2014/14 to incorporate updated Product Disclosure Statements and Policy Terms for OnePath Life Limited, applying from 1 July 2014.

Key Provisions

The rulings mentioned in the notice issued by the Commissioner of Taxation, Chris Jordan, pertain to specific schemes and policies concerning income tax. CR 2017/55 and CR 2017/56 outline the Commissioner's position on payments under the 'ENGIE Loy Yang Early Retirement Scheme 2017' for employees of IPM Operation & Maintenance Loy Yang Pty Ltd and International Power (Australia) Pty Ltd, and the 'South East Water Corporation Early Retirement Scheme 2017' for employees of South East Water Corporation respectively. These rulings apply from 23 August 2017 to 31 August 2019 and 23 August 2017 to 28 February 2018, respectively, and continue to apply to entities that entered into the schemes during the term of the Ruling. CR 2017/57, CR 2017/58, and CR 2017/59 provide the Commissioner's position on scrip for scrip roll-over – Charter Hall Long WALE REIT Simplification, the 'Arconic Inc. – Employee Share Scheme', and the 'Alcoa Corporation – Separation from Alcoa Inc. (now Arconic Inc.) – Employee Share Scheme', respectively. These rulings apply from 1 July 2016 to 30 June 2019, 1 July 2016 to 30 June 2017, and 1 July 2016 to 30 June 2017, and continue to apply to entities that entered into the schemes during the term of the Ruling. PR 2014/14, amended by PR 2014/14 Addendum, pertains to OnePath Life Limited – OneCare Policy – Life Cover, Total and Permanent Disability Cover and/or Trauma Cover, and applies from 1 July 2014. The obligations and requirements imposed by these rulings primarily involve the disclosure and reporting of relevant income and taxation liabilities for employees participating in the specified schemes. Employers and employees must ensure that they comply with the Commissioner's position as outlined in the respective rulings. This includes accurately reporting income received under the early retirement schemes and ensuring that the correct tax is paid on those amounts. For the scrip for scrip roll-over and employee share schemes, unit holders must ensure that the correct tax treatment is applied to any capital gains or losses arising from the disposal or acquisition of units in the specified trusts. Breach of the requirements set out in these rulings may result in a variety of civil and criminal consequences. The Australian Taxation Office (ATO) may impose penalties for non-compliance, which may include fines, interest on unpaid tax, and even criminal prosecution in the most serious cases. The maximum penalties for non-compliance vary depending on the nature and severity of the breach, but may include fines of up to $1,100 for individuals and $5,500 for corporations, as well as additional interest and penalties on unpaid tax. In cases of fraudulent or deliberate non-compliance, the penalties may be even more severe, with fines of up to $22,000 for individuals and $110,000 for corporations, as well as imprisonment in some cases. It is important for employers and employees to ensure that they comply with the requirements set out in these rulings to avoid any potential penalties or consequences.