ATO’s guidelines on deceased estates 

The Australian Taxation Office (ATO) has issued the following Practical Compliance Guidelines on deceased estates:

  • Practical Compliance Guideline PCG 2018/4 enables a legal personal representative (LPR) of a small and less complex deceased estate to finalise the estate without concern that they may have to fund a liability of the deceased from their own assets, and provides guidance on when an LPR will be treated as having notice of a claim by the ATO. 
  • Draft Practical Compliance Guideline PCG 2018/D6 identifies factors the ATO will consider when deciding whether to exercise the discretion to extend the two year period to dispose of a former main residence dwelling acquired from a deceased estate (for purposes of the capital gains tax exemption), and a safe harbour compliance approach that applies as if the ATO had exercised the discretion to allow the longer period. Comments were due 21 September 2018. 

Care with payments for exploitation of professional sportsperson’s ‘public fame’ or ‘image’  

The ATO has withdrawn its Draft Practical Compliance Guideline PCG 2017/D11 which provided the ATO’s draft guidance on the treatment of payments for use and exploitation of a professional sportsperson’s ‘public fame’ or ‘image’.  

Note that it was announced as part of the 2018-19 Federal Budget that from 1 July 2019, the law will be amended to ensure that high profile individuals will not be able to take advantage of lower tax rates by licencing their fame or image to another entity.  

Although the ATO has indicated that it has concerns about the tax effectiveness of some of the arrangements it has observed, it has stated that given the withdrawal of the draft PCG, it will not apply compliance resources to review an arrangement entered into before 24 August 2018 (being the date of the withdrawal of the draft PCG) where that arrangement complies with the terms of this withdrawn draft Guideline, provided that the arrangement was entered into and carried out as a consequence of the taxpayer relying on the withdrawn draft Guideline in good faith.