COMMISSIONER OF TAXATION
The Commissioner of Taxation, Chris Jordan, 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 |
CR 2014/85 | Income tax: Macquarie Atlas Roads International Limited Return of Capital | The Ruling sets out the Commissioner’s position for the holders of ordinary shares in Macquarie Atlas Roads International Limited (MARIL) who: (a) were listed on the MARIL share register on the Record Date (being 24 September 2014) for the Scheme (b) are residents of Australia as defined in subsection 6(1) on the Record Date (c) did not hold their MARIL shares as revenue assets (as defined in section 977‑50 of the ITAA 1997) nor as trading stock (as defined in subsection 995‑1(1) of the ITAA 1997) – that is, they held their MARIL shares broadly on capital account, and (d) are not subject to the taxation of financial arrangements rules in Division 230 of the ITAA 1997 in relation to gains and losses on their MARIL shares. (Note – Division 230 of the ITAA 1997 will generally not apply to individuals, unless they have made an election for it to apply to them). The Ruling applies from 1 July 2014 to 30 June 2015. |
CR 2014/86 | Income tax: Macquarie Bank Limited – Macquarie Bank Capital Notes | The Ruling sets out the Commissioner’s position for investors (referred to in this Ruling as Holders) who acquired fully paid, unsecured, subordinated, mandatorily convertible notes issued by Macquarie Bank Limited (MBL) called Macquarie Bank Capital Notes (BCN), and who: - are residents of Australia (within the meaning of subsection 6(1) of the ITAA 1936) during the period in which they hold BCN
- do not hold their BCN as revenue assets (as defined in section 977‑50 of the ITAA 1997) nor as trading stock (as defined in subsection 995‑1(1) of the ITAA 1997) – that is, they hold their BCN on capital account, and
- are not subject to the taxation of financial arrangements (TOFA) rules in Division 230 of the ITAA 1997 in relation to gains and losses on their BCN.
The Ruling applies from 1 July 2014 to 30 June 2023. |
CR 2014/87 | Income tax: Challenger Limited: Challenger Capital Notes | The Ruling sets out the Commissioner’s position for investors who are allotted non‑cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes issued by Challenger Limited (Challenger), called Challenger Capital Notes (Notes or Note) and who: - are residents of Australia (within the meaning of that term in subsection 6(1) of the ITAA 1936)
- hold their Notes on capital account, and
- are not subject to the Taxation of Financial Arrangements (TOFA) rules in Division 230 in relation to financial arrangements under the scheme.
The Ruling applies from 1 July 2014 to 30 June 2024. |
NOTICE OF ADDENDUM |
Ruling Number | Subject | Brief Description |
GSTD 2013/1 | Goods and services tax: when a payment for a supply fails, is a failed payment fee charged by the supplier consideration for a supply? | The Addendum amends Goods and Services Tax Determination GSTD 2013/1 to reflect the insertion of Division 142 into the A New Tax System (Goods and Services Tax) Act 1999. The Addendum also makes further minor amendments to GSTD 2013/1 to correct other minor non‑technical errors. The Addendum applies on and from 31 May 2014. |
NOTICE OF WITHDRAWAL |
Ruling Number | Subject | Brief Description |
GSTA TPP 032 | Goods and services tax: can a tax invoice show an amount representing combined GST and wine equalisation tax (together sometimes called WEG) instead of the amount of GST? | Goods and Services Tax Advice GSTA TPP 032 is withdrawn with effect from 15 October 2014. |
Overview
The Australian Taxation Office (ATO) has released several rulings under the Commissioner of Taxation, including Rulings CR 2014/85, CR 2014/86, and CR 2014/87, as well as an Addendum to GSTD 2013/1, and the withdrawal of GST Advice TPP 032, to provide clarity on specific tax obligations for certain financial investments and goods and services tax (GST) issues. These rulings were introduced to address gaps in the interpretation and application of existing tax laws to particular financial products and transactions. The ATO rulings aim to provide certainty to taxpayers by clarifying the tax treatment of Macquarie Atlas Roads International Limited shares, Macquarie Bank Capital Notes, Challenger Capital Notes, and the treatment of failed payment fees under GST. These rulings were enacted to ensure taxpayers are aware of their obligations and to promote compliance with Australian tax laws.
Scope and Application
The Commissioner of Taxation has issued several rulings and notices that pertain to specific financial arrangements and transactions in Australia, impacting various entities and residents within the country. Ruling CR 2014/85 applies to holders of ordinary shares in Macquarie Atlas Roads International Limited who were listed on the company’s share register on a specified date, provided they were Australian residents, held their shares on capital account, and were not subject to the taxation of financial arrangements rules. Similarly, Ruling CR 2014/86 applies to investors who acquired Macquarie Bank Capital Notes and are Australian residents, holding these notes on capital account and not subject to the taxation of financial arrangements rules. Ruling CR 2014/87 applies to investors allotted Challenger Capital Notes by Challenger Limited, who must be Australian residents and hold these notes on capital account, while also not being subject to the taxation of financial arrangements rules. These rulings are in effect from July 1, 2014, to varying dates in 2024, addressing specific tax implications for these financial instruments. Additionally, the Addendum to Goods and Services Tax Determination GSTD 2013/1 amends the determination to reflect changes introduced by Division 142 in the A New Tax System (Goods and Services Tax) Act 1999, applying from May 31, 2014.
Key Provisions
The main provisions of the Commissioner of Taxation’s rulings focus on clarifying the tax treatment of certain financial instruments held by Australian residents. Ruling CR 2014/85 pertains to the return of capital by Macquarie Atlas Roads International Limited, outlining the tax implications for shareholders who held their shares on capital account and were not subject to the taxation of financial arrangements rules (section 6(1) of the ITAA 1997). Similarly, Ruling CR 2014/86 deals with Macquarie Bank Limited’s Macquarie Bank Capital Notes, specifying the tax treatment for Australian residents holding these notes on capital account (section 977-50 and 995-1(1) of the ITAA 1997). Ruling CR 2014/87 concerns Challenger Limited’s Challenger Capital Notes, providing clarity on the tax treatment for Australian residents holding these notes on capital account and not subject to the Taxation of Financial Arrangements rules (section 6(1) of the ITAA 1936 and Division 230).
The obligations and requirements imposed by these rulings include ensuring that the holders of the specified financial instruments satisfy the criteria of being Australian residents and holding the instruments on capital account, not as revenue assets or trading stock. Additionally, the rulings specify that the holders must not be subject to the taxation of financial arrangements rules for the purposes of these instruments. These conditions must be met for the rulings to apply effectively, thereby guiding taxpayers on the tax treatment of their investments.
Failure to comply with the obligations outlined in these rulings can lead to unintended tax consequences. While the rulings themselves do not specify penalties for non-compliance, breaches of the underlying taxation laws, such as the ITAA 1997 and ITAA 1936, may result in penalties. For instance, under the general provisions of the ITAA 1936, penalties can include fines up to 25% of the tax shortfall or, in more serious cases, up to 50% of the shortfall. Additionally, individuals or entities found to have deliberately or negligently breached tax laws may face criminal charges, resulting in imprisonment or further financial penalties. The Commissioner's rulings serve as guidance to ensure taxpayers correctly interpret and apply the relevant tax laws to their specific circumstances.