The Commissioner of Taxation, Chris Jordan, gives notice of the following Rulings, copies of which can be obtained from ato.gov.au/law.
NOTICE OF RULINGS |
Ruling number | Subject | Brief description |
CR 2019/33 | Property Exchange Australia Limited – Employee Share Option Plan – Commissioner’s discretion to reduce the minimum holding period in relation to options acquired | This Ruling sets out the Commissioner’s position on participants in the Property Exchange Australia Limited Employee Share Option Plan. The Ruling applies to the specified class of entities that enter into the scheme from 1 July 2018 until 30 June 2019. |
LCR 2019/1 | The business continuity test – carrying on a similar business | This Ruling sets out the Commissioner’s view on what is considered to be ‘carrying on a similar business’ for the purpose of the business continuity test introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Act 2019. |
PR 2019/2 | Income tax: W.A. Blue Gum Project 2019 | This Ruling sets out the Commissioner’s position on the tax consequences for investors in the W.A. Blue Gum Project 2019 This Ruling applies only to the specified class of entities that enter into the scheme from 22 May 2019 until 30 June 2019. |
TD 2019/8 | Income tax: in the definition of ‘financial intermediary business’ what is meant by ‘a business whose income is principally derived from the lending of money’? | TD 2019/8 finalises draft ruling TD 2019/D3 Income tax: in the definition of ‘financial intermediary business’ what is meant by ‘a business whose income is principally derived from the lending of money’? and sets out the Commissioner’s view of what will be considered to fall within the meaning of that phrase. |
TR 2019/2 | Income tax: whether penalty interest is deductible | This Ruling is a rewrite of TR 93/7 Income tax: whether penalty interest payments are deductible to reflect current legislative provisions and sets out the Commissioner’s view on when penalty interest is deductible. The Ruling applies to years of income commencing both before and after its date of issue. |
NOTICE OF WITHDRAWAL |
Ruling number | Subject | Brief description |
TR 93/7 | Income tax: whether penalty interest payments are deductible | TR 93/7 is withdrawn with effect from 22 May 2019. |
Overview
The Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Act 2019, enacted in 2019, addresses gaps in the tax laws related to business continuity and employee share option plans, among other things. This legislation was introduced by the Australian Parliament to refine and update existing tax provisions to better support business operations and investment. The policy objective of the Act is to ensure that businesses can transition and adapt without facing undue tax burdens, while also providing clarity for employees participating in share option schemes. The Act aims to provide certainty and stability in tax treatment for businesses and employees, thereby encouraging investment and continuity in business operations.
Scope and Application
The Commissioner of Taxation has issued various rulings that detail specific applications and interpretations of the tax law as it pertains to certain transactions and entities. CR 2019/33 pertains to the Property Exchange Australia Limited Employee Share Option Plan, providing the Commissioner’s discretion to reduce the minimum holding period in relation to options acquired. This Ruling is applicable to the specified class of entities that enter into the scheme between 1 July 2018 and 30 June 2019. LCR 2019/1 explains the business continuity test, specifically what is considered 'carrying on a similar business' for the purpose of the business continuity test introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Act 2019, applicable to relevant entities during the specified period. PR 2019/2 addresses the tax consequences for investors in the W.A. Blue Gum Project 2019, applicable to specified class of entities entering the scheme from 22 May 2019 until 30 June 2019. TD 2019/8 clarifies the definition of 'financial intermediary business' by explaining what is meant by 'a business whose income is principally derived from the lending of money'. TR 2019/2 discusses the deductibility of penalty interest and applies to years of income commencing both before and after the date of issue. Notably, TR 93/7, which previously addressed the deductibility of penalty interest payments, has been withdrawn from 22 May 2019.
Key Provisions
The document outlines several rulings and a withdrawal of a previous ruling, all issued by the Commissioner of Taxation, Chris Jordan, under the authority of the Australian Taxation Office (ATO). CR 2019/33 (paragraph 2) provides the Commissioner’s discretion regarding the reduction of the minimum holding period for options acquired under the Property Exchange Australia Limited Employee Share Option Plan. This ruling applies to a specified class of entities that enter into the scheme from 1 July 2018 to 30 June 2019. The ruling clarifies the Commissioner’s position, providing guidance on the conditions under which the minimum holding period may be reduced, thereby affecting the tax treatment of these options.
LCR 2019/1 (paragraph 3) addresses the business continuity test, specifically focusing on what is considered to be 'carrying on a similar business'. This ruling is significant for entities affected by the business continuity test introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Act 2019. It sets out the Commissioner’s view on the criteria that must be met to determine if a business is considered to be continuing in a similar capacity, impacting the tax treatment of such businesses. PR 2019/2 (paragraph 4) outlines the tax consequences for investors in the W.A. Blue Gum Project 2019. This ruling applies to a specified class of entities entering into the scheme from 22 May 2019 to 30 June 2019, detailing the tax implications for those investors.
TD 2019/8 (paragraph 5) finalises draft ruling TD 2019/D3, clarifying what is meant by 'a business whose income is principally derived from the lending of money' in the context of the definition of ‘financial intermediary business’. This ruling provides a definitive interpretation of this phrase, which is crucial for determining the tax treatment of such businesses. TR 2019/2 (paragraph 6) rewrites TR 93/7 to reflect current legislative provisions regarding the deductibility of penalty interest. This ruling applies to years of income commencing both before and after its date of issue, clarifying the conditions under which penalty interest payments are deductible.
Lastly, TR 93/7 (paragraph 7) is withdrawn with effect from 22 May 2019, indicating that the previous guidance on the deductibility of penalty interest payments is no longer applicable. This withdrawal means that TR 2019/2 should be referred to for current rules on penalty interest deductibility.