COMMISSIONER OF TAXATION
The Commissioner of Taxation, Michael D’Ascenzo, gives notice of the following Rulings, copies of which can be obtained from Branches of the Australian Taxation Office or at http://law.ato.gov.au.
NOTICE OF RULINGS |
Ruling Number | Subject | Brief Description |
TR 2012/7 | Income tax: capital allowances: treatment of open pit mine site improvements | The Ruling explains the operation of the capital allowance rules in Division 40 of the Income Tax Assessment Act 1997 as they apply to an open pit mine site improvement that comes into being through the conduct of an open pit mining operation. The Ruling applies to years of income commencing both before and after its date of issue. |
NOTICE OF ADDENDA |
Ruling Number | Subject | Brief Description |
SMSFR 2008/1 | Self Managed Superannuation Funds: giving financial assistance using the resources of a self managed superannuation fund to a member or relative of a member that is prohibited for the purposes of paragraph 65(1)(b) of the Superannuation Industry (Supervision) Act 1993 | The Addendum amends SMSFR 2008/1 to reflect relevant legislative changes effected since the Ruling’s publication and to correct some minor typographical errors. More specifically, the legislative amendments are: the repeal of subsection 65(6) of the Superannuation Industry (Supervision) Act 1993 (SISA) (effective 1 July 2008); insertion of the definition of ‘relative’ into subsection 10(1) of the SISA (effective 1 July 2008); insertion of section 62A of the SISA (effective 1 July 2011); and insertion of regulation 13.18AA of the Superannuation Industry (Supervision) Regulations 1994 (effective 1 July 2011). The Addendum applies on and from 1 July 2011. |
SMSFR 2008/2 | Self Managed Superannuation Funds: the application of the sole purpose test in section 62 of the Superannuation Industry (Supervision) Act 1993 to the provision of benefits other than retirement, employment termination or death benefits | The Addendum amends SMSFR 2008/2 to reflect relevant legislative changes effected since the Ruling’s publication and to correct some minor typographical errors. More specifically, the legislative amendments are: the repeal of subsection 67(4A) of the Superannuation Industry (Supervision) Act 1993 (SISA) (effective 7 July 2010); insertion of section 62A of the SISA (effective 1 July 2011); insertion of section 67A and section 67B of the SISA (effective 7 July 2010); and insertion of regulation 13.18AA of the Superannuation Industry (Supervision) Regulations 1994 (effective 1 July 2011). The Addendum applies on and from 1 July 2011. |
NOTICE OF ERRATUM |
Ruling Number | Subject | Brief Description |
CR 2012/102 | Income tax: off-market share buy-back: IMB Limited | The Erratum corrects CR 2012/102 to insert deleted text into paragraph 83 and corrects the numbering of items under subparagraph 114(b). The Erratum applies on and from 7 November 2012. |
Overview
The Commissioner of Taxation has issued Rulings and an Addendum under the Income Tax Assessment Act 1997 and the Superannuation Industry (Supervision) Act 1993, enacted by the Australian Parliament, to clarify and update the interpretation and application of certain provisions. The Income Tax Assessment Act 1997 was enacted to regulate the assessment and collection of income tax and addresses issues such as capital allowances and deductions for specific types of expenses. The Superannuation Industry (Supervision) Act 1993 was enacted to regulate the operation of superannuation funds and aims to ensure that superannuation funds are managed for the exclusive purpose of providing benefits to members on their retirement and are not misused. The Rulings and Addendum aim to provide greater clarity and ensure that the legislation is applied consistently and correctly. These Rulings and the Addendum are designed to assist taxpayers in understanding their obligations and rights under the relevant Acts and to assist the Australian Taxation Office in administering these Acts.
Scope and Application
The Commissioner of Taxation has issued several rulings and an addendum concerning the application of the Superannuation Industry (Supervision) Act 1993, as well as an erratum regarding an income tax ruling. The Superannuation Industry (Supervision) Act 1993 governs self-managed superannuation funds (SMSFs) and applies to trustees, members, and related entities within Australia. The Act is overseen by the Australian Taxation Office (ATO) and pertains to the regulation and supervision of superannuation funds, ensuring compliance with the sole purpose test and prohibiting financial assistance to members or their relatives using fund resources. The Addendum to SMSFR 2008/1 and SMSFR 2008/2 reflects legislative changes and corrections made to the Act and its regulations, effective from 1 July 2011. These amendments include the repeal of certain subsections and the insertion of new sections and regulations, which refine the application of the sole purpose test and the prohibition on financial assistance. The Erratum to CR 2012/102 corrects specific errors in the income tax ruling regarding off-market share buy-backs, effective from 7 November 2012. These rulings and amendments extend the application of the Act by clarifying and updating the legislative framework governing SMSFs and tax obligations.
Key Provisions
The primary sections of the rulings and addenda revolve around tax implications and compliance for entities involved in specific financial activities. For instance, TR 2012/7 (paragraph 1) addresses the application of capital allowance rules under Division 40 of the Income Tax Assessment Act 1997 concerning improvements in an open pit mine site. This ruling provides clarity on how such improvements are treated for tax purposes. SMSFR 2008/1 (paragraph 3) and its Addendum (paragraph 5) focus on the prohibition of providing financial assistance using self-managed superannuation fund (SMSF) resources to members or their relatives, in accordance with the Superannuation Industry (Supervision) Act 1993 (SISA). The Addendum corrects previous rulings and reflects legislative changes such as the repeal of subsection 65(6) of the SISA, effective 1 July 2008, and the insertion of new sections and regulations, effective 1 July 2011. Similarly, SMSFR 2008/2 and its Addendum (paragraph 7) deal with the application of the sole purpose test in section 62 of the SISA to benefits other than retirement, employment termination, or death benefits, correcting and updating the rulings to reflect recent legislative changes.
The obligations imposed by these rulings and addenda primarily concern entities such as mining companies and SMSF trustees. For example, under TR 2012/7, mining companies must correctly account for capital allowances related to open pit mine site improvements. In relation to SMSFs, trustees must ensure they do not provide prohibited financial assistance to members or their relatives, as stipulated by SMSFR 2008/1 and its Addendum. These trustees must also comply with the updated sole purpose test provisions in SMSFR 2008/2 and its Addendum, ensuring that all benefits provided are strictly for retirement purposes. Correct application of these provisions requires thorough understanding and adherence to the detailed legislative requirements and any subsequent amendments.
Breaches of the provisions outlined in these rulings and addenda can result in significant consequences. For instance, incorrect application of capital allowance rules under TR 2012/7 may lead to misdeclaration of taxable income, potentially attracting penalties under the Income Tax Assessment Act 1997. For SMSFs, providing prohibited financial assistance as outlined in SMSFR 2008/1 and its Addendum can lead to the fund losing its favourable tax status, resulting in substantial tax liabilities. Furthermore, failure to comply with the sole purpose test in SMSFR 2008/2 and its Addendum can result in penalties under section 290 of the SISA, including fines of up to $21,000 for individuals and $105,000 for entities. The Erratum in CR 2012/102 corrects specific text and numbering issues, and while not explicitly detailing penalties, non-compliance with such corrections can lead to incorrect tax filings and subsequent penalties.