Notice of Rulings, Notice of Withdrawal

Overview

The Commissioner of Taxation, Chris Jordan, issued a Notice of Rulings in 2020, providing clarity on various tax matters and withdrawing a previous ruling. This Notice is crucial for employer clients, entities involved in specific financial schemes, and borrowers under certain loan facilities. The rulings cover a range of tax consequences and applications, including fringe benefits tax for Smartgroup Corporation Ltd and subsidiaries, income tax provisions for AMP Capital Notes 2, and tax consequences for entities entering the W.A. Blue Gum Project 2020 and the Blended Plus Loan Facility. Additionally, the Commissioner’s view on deductions for expenditure on environmental protection activities was outlined, while Product Ruling PR 2019/4 concerning the Challenger Guaranteed Annuity (Liquid Lifetime) was withdrawn. These rulings aim to ensure compliance and provide certainty for taxpayers by clarifying the application of relevant tax provisions.

Scope and Application

The Commissioner of Taxation, Chris Jordan, has issued several rulings and withdrawn one ruling, each with specific applications and scope. Ruling CR 2020/30 applies to employer clients of Smartgroup Corporation Ltd and addresses the tax implications of recipient’s payments made after the fringe benefits tax (FBT) year but before the FBT return is lodged. This ruling is effective from 1 April 2020 to 31 March 2024. Ruling CR 2020/31 concerns the income tax provisions for specified entities subscribing for and acquiring AMP Capital Notes 2 issued by AMP Limited, applying from 1 July 2019 to 30 June 2028. Product Ruling PR 2020/7 provides the Commissioner’s opinion on the application of relevant provisions for entities entering the W.A. Blue Gum Project 2020 scheme from 17 June 2020 to 20 June 2030. Product Ruling PR 2020/8 explains the tax consequences for borrowers charged a discounted home loan interest rate under the Blended Plus Loan Facility, applicable from 17 June 2020 to 30 June 2023. Lastly, Tax Ruling TR 2020/2 outlines the Commissioner’s view on deductions for expenditure on environmental protection activities, applying both before and after the date of issue. Product Ruling PR 2019/4, concerning the Challenger Guaranteed Annuity (Liquid Lifetime) 2019, has been withdrawn effective from 17 June 2020.

Key Provisions

The main operative sections of the Rulings outlined in the Commissioner's notice address specific tax scenarios for particular entities. For example, CR 2020/30 discusses the tax implications for employer clients of Smartgroup Corporation Ltd when recipient's payments are made after the end of the FBT year but before the FBT return is lodged. Similarly, CR 2020/31 provides guidance on the income tax provisions for entities subscribing to and acquiring AMP Capital Notes 2 issued by AMP Limited. PR 2020/7 and PR 2020/8 offer opinions on the tax consequences for entities involved in the W.A. Blue Gum Project 2020 and those borrowing under the Blended Plus Loan Facility, respectively. TR 2020/2 provides the Commissioner's view on deductions for expenditure on environmental protection activities under Subdivision 40-H of the Income Tax Assessment Act 1997. The obligations and requirements imposed by these Rulings are specific to the entities they govern. For instance, employer clients of Smartgroup Corporation Ltd must adhere to the tax consequences outlined in CR 2020/30 when making recipient’s payments outside the normal FBT year but before lodgment of the FBT return. Entities subscribing to AMP Capital Notes 2 must follow the income tax provisions detailed in CR 2020/31. Entities participating in the W.A. Blue Gum Project 2020 need to comply with the tax implications set forth in PR 2020/7, while those borrowing under the Blended Plus Loan Facility must abide by the tax consequences described in PR 2020/8. Lastly, entities engaging in environmental protection activities must ensure their deductions comply with the provisions outlined in TR 2020/2. In terms of offences, penalties, or consequences for breach, the Rulings themselves do not specify penalties but refer to the underlying legislation where such details are provided. For example, if an entity fails to comply with the provisions outlined in the Rulings, they could potentially face penalties under the relevant sections of the Income Tax Assessment Act 1997 or other applicable taxation laws. The maximum penalties would depend on the specific breach and the provisions of the underlying legislation. It is essential for entities to carefully adhere to the guidance provided in these Rulings to avoid any potential penalties or legal consequences.