Tax Determination on intangible capital improvements made to preCGT asset

Taxation Determination TD 2017/1 indicates that intangible capital improvements made to an asset that was acquired before 20 September 1985 (a preCGT asset) can be a separate asset for the purpose of subsections 108-70(2) or (3) of the Income Tax Assessment Act 1997. This Determination applies to years of income commencing both before and after its date of issue. 

ATO administrative treatment of proposed tax changes involving small business entities

The ATO has released its administrative treatment in relation to the Government’s proposals to increase the unincorporated small business tax discount incrementally over 10 years from 5 per cent to 16 per cent, and to increase the small business entity turnover threshold from AUD 2 million to AUD 10 million from 1 July 2016 (as contained in Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016, which is still before Parliament). Broadly, the ATO will accept returns as lodged until the outcome of the proposed amendments is known, at which time affected taxpayers should review their position and seek amendments if required.

ATO releases draft effective life of assets used in various industries

The ATO has released for comment drafts of the proposed effective life of assets used in the following industries:

• mineral mining support services

• wool scouring

• electronic information storage services.

IGOT 2017 Work Program

The Inspector General of Taxation (IGOT) released their work program for 2017. The Inspector General plans to commence the following new reviews in 2017: Goods and Services Tax Refunds, PAYG Instalments System, and Future of the Tax Profession.

The IGOT also identified the following additional reviews which may also commence in the 2017 depending on time and resourcing considerations and competing priorities:

• Influencing willing participation in the tax and superannuation systems,

• ATO’s approach to providing advice and guidance,

• ATO’s use of fraud or evasion opinions, and

• ATO’s approach to R&D incentive claims.

Review of ATO advice on scholarships

The ATO released a discussion paper on the exemption from taxation for amounts paid as a scholarship, bursary, educational allowance or educational assistance. Comments can be made until 31 March 2017.

Audit on ATO’s monitoring and implementation of recommendations

The Australian National Audit Office (ANAO) completed its audit of the effectiveness of the ATO’s monitoring and implementation of recommendations about its administration made by the ANAO and parliamentary committees. The audit found that the ATO effectively monitored and implemented these recommendations.

Transparency of beneficial ownership of companies

The Minister for Revenue and Financial Services has released a consultation paper regarding the previously announced measure to increase transparency of the beneficial ownership of companies. The paper sets out options for establishing a register of beneficial ownership for companies, the companies that would be within scope, and the information to be collected. Comments can be made until 13 March 2017.

Federal Court affirms Commissioner’s decision to issue multiple ‘alternative’ assessments

In Whitby Land Company Pty Ltd (Trustee) v Deputy Commissioner of Taxation, Federal Court affirmed the Commissioner’s decision to issue multiple ‘alternative’ assessments to a trustee under section 98 and 99A of the Income Tax Assessment Act 1936. The Court held the Commissioner could make an assessment against more than one person in respect of the same income and dismissed the trustee’s claims that they were mere tentative or provisional assessments.