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 |
TD 2014/8 | Income tax: does a franking credit arise in the franking account of a head company of a consolidated group when a franked distribution is made by an entity that is not a member of the consolidated group to a trust that is a subsidiary member of the consolidated group? | The Determination sets out the Commissioner’s opinion on franking credits. The Determination applies to years of income commencing both before and after its date of issue. |
TD 2014/9 | Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living‑away‑from‑home allowance fringe benefit for the fringe benefits tax year commencing on 1 April 2014 | The Determination sets out the amounts that the Commissioner considers reasonable for food and drink expenses for employees receiving a living-away-from-home allowance. The Determination applies to the FBT year commencing on 1 April 2014. |
CR 2014/39 | Income tax: Microsoft Corporation 2001 Stock Plan | The Ruling sets out the Commissioner’s opinion for employees of Microsoft Pty Ltd receiving Stock Awards. The Ruling applies from 13 December 2011. |
NOTICE OF ADDENDUM |
Ruling Number | Subject | Brief Description |
MT 2008/2 | Shortfall penalties: administrative penalty for taking a position that is not reasonably arguable | The Addendum amends Miscellaneous Tax Ruling MT 2008/2 to reflect amendments to the Taxation Administration Act 1953 (TAA) contained in the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 (Amendment Act). Under the Amendment Act an entity will be liable to a scheme penalty under subsection 284‑145(2B) of the TAA where the transfer pricing provisions in Subdivisions 815‑B or 815‑C of the Income Tax Assessment Act 1997 apply. Where this penalty applies, the Amendment Act inserts Subdivision 284‑E that states that an entity will not have a reasonably arguable position for a matter if the entity has not met specific documentation requirements for that matter. Application: This Addendum applies on and from 29 June 2013. |
NOTICE OF WITHDRAWALS |
Ruling Number | Subject | Brief Description |
GSTA TPP 019 | Goods and services tax: are sales of section 100‑5 vouchers, commonly referred to as face value vouchers (FVVs), to retail outlets and subsequent sales of the same vouchers to customers taxable supplies? | Withdrawn with effect from 16 April 2014. |
GSTA TPP 020 | Goods and services tax: when a retail outlet makes a supply to a customer in exchange for a section 100-5 voucher, commonly referred to as a face value voucher (FVV), is the supply by the retail outlet a taxable supply? | Withdrawn with effect from 16 April 2014. |
Overview
The Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 was enacted by the Parliament of Australia to address issues of tax avoidance and multinational profit shifting. This Act aims to strengthen the framework for preventing tax avoidance schemes and to ensure that multinational corporations are taxed appropriately in Australia. One of the key policy objectives of the Act is to close loopholes and ensure that profits are taxed where economic activities generating the profits are performed and where value is created. The Act introduces measures such as the General Anti-Avoidance Rule (GAAR) and specific rules targeting base erosion and profit shifting by multinational entities, including new transfer pricing rules and a controlled foreign company (CFC) regime.
Scope and Application
The Taxation Determinations and Rulings published by the Commissioner of Taxation are applicable to taxpayers and entities involved in specific transactions and conduct as outlined in each respective ruling. These rulings are instrumental in providing clarity on complex tax issues, ensuring taxpayers are aware of the Commissioner's interpretation of the law. For instance, TD 2014/8 provides guidance on the circumstances under which a franking credit arises in the franking account of a head company of a consolidated group when a franked distribution is made by a non-group entity to a subsidiary trust, applicable to income years starting both before and after the issuance of the ruling. Similarly, TD 2014/9 specifies the reasonable amounts for food and drink expenses under section 31G of the Fringe Benefits Tax Assessment Act 1986 for employees receiving a living-away-from-home allowance, effective from the FBT year commencing on 1 April 2014. CR 2014/39 offers the Commissioner’s opinion on the tax treatment of Stock Awards for employees of Microsoft Pty Ltd, applicable from 13 December 2011. Additionally, the Addendum to MT 2008/2, which was updated to reflect changes introduced by the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013, imposes administrative penalties for taking positions that are not reasonably arguable, effective from 29 June 2013. These rulings and their amendments demonstrate the Commissioner's commitment to providing clear and actionable guidance to taxpayers within the Australian jurisdiction.
Key Provisions
The Commissioner of Taxation has issued several rulings and an addendum under the Tax Administration Act 1953 (TAA) that outline specific interpretations and applications of tax laws. The rulings cover various aspects of income tax and fringe benefits tax, providing clarity on matters such as franking credits in consolidated groups, reasonable amounts for food and drink expenses for employees, and the treatment of stock awards under a particular plan. For example, TD 2014/8 (section 1) addresses whether a franking credit arises in the franking account of a head company when a franked distribution is made by a non-group entity to a subsidiary trust, clarifying the Commissioner’s opinion on this issue. Similarly, TD 2014/9 (section 1) provides the Commissioner's view on the reasonable amounts for food and drink expenses for employees receiving a living-away-from-home allowance, applicable for the FBT year commencing on 1 April 2014.
These rulings impose certain obligations on taxpayers by providing detailed guidance on tax treatment in specific scenarios. For instance, entities within consolidated groups must ensure that they correctly account for franking credits in accordance with the guidance provided in TD 2014/8. Employers offering living-away-from-home allowances need to align with the reasonable amounts specified in TD 2014/9 to avoid any disputes regarding fringe benefits tax. Furthermore, the ruling on the Microsoft Corporation 2001 Stock Plan (CR 2014/39) requires that employees of Microsoft Pty Ltd receiving Stock Awards comply with the specified tax treatment outlined in the ruling.
The Addendum to MT 2008/2 (section 1) introduces stricter penalties for taking a position that is not reasonably arguable, particularly in relation to transfer pricing provisions. Under the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 (Amendment Act), an entity may be liable for a scheme penalty if it does not meet specific documentation requirements, and this penalty applies from 29 June 2013. This means that entities must ensure they maintain adequate documentation to support their tax positions to avoid penalties. Additionally, the withdrawal of GSTA TPP 019 and GSTA TPP 020, effective from 16 April 2014, removes previous guidance on the taxability of sales of face value vouchers, leaving taxpayers to determine their tax obligations in this area without the prior specific rulings.