ATO releases new Practical Compliance Guidelines

The Australian Taxation Office (ATO) has released the following Practical Compliance Guidelines (PCGs):

PCG 2016/11: Fuel tax credits - apportioning taxable fuel used in a heavy vehicle with auxiliary equipment

PCG 2016/12: Petroleum Resource Rent Tax (PRRT) - deductibility of general project expenditure relating to the overhead component of time written costs

PCG 2016/13: PRRT - deductibility of general project expenditure

PCG 2016/14: Discount to the valuation of housing fringe benefits provided by retirement village operators

PCG 2016/15: Effects of the Addendum to Taxation Ruling 2002/14 (TR 2002/14A2 Income Tax: taxation of retirement village operators for retirement village operators making capital growth payments before, on or after 26 November 2014)

Update on the ATO’s strategies

The ATO continues with its blueprint for change and has updated on the progress of its reinvention program, including improvements that have been or will be delivered in 2016-17 for all taxpayers, including public business, privately owned and wealthy groups, individuals, small business, and superannuation funds.

In addition, the ATO recently released its Corporate Plan for 2016-17, which outlines the following significant priorities it has set for the current financial year:  delivering myTax for all individuals who wish to self-prepare

 a new practitioner lodgment service for tax professionals

 improved help and support for all clients  leadership and contributions to international tax administration reform

 tackling tax avoidance, and

 streamlining the process for business registration.

The Commissioner will report on the results of this plan in the Commissioner of Taxation annual report 2016–17.

ANAO report on ATO’s External Compliance Assurance Process

The Australian National Audit Office (ANAO) has released its report on its review of the ATO’s pilot of the External Compliance Assurance Process (ECAP) for large business taxpayers. In brief, the ECAP pilot involved taxpayer participants to choose to either have a registered company auditor check factual matters identified by the ATO or have a streamlined review performed by ATO staff.

The report concluded that the pilot provided the ATO with a sound basis for conducting ECAP for large business taxpayers in the future. The audit found that the pilot was conducted effectively and demonstrated the potential for better client experiences, cost reductions and increased efficiency, by satisfactorily verifying factual matters in company tax returns.

Wine Equalisation Tax (WET) rebate

On 2 September 2016, the Federal Government released an implementation paper on measures to tighten eligibility criteria for the WET rebate that were announced in the 2016-17 Federal Budget. Submissions can be made until 7 October 2016.

Foreign-held agricultural land

The Government has released Australia’s first report from the Agricultural Land Register. The Land Register shows foreign investors hold 13.6 per cent of all Australian agricultural land as at 30 June 2016, with the United Kingdom as Australia’s principal source of investment in agriculture. The countries with the next largest share of agricultural land holdings are the United States, Netherlands, Singapore and China.

New ATO review of penalties The ATO has commenced consultation on its approach to penalties for small business (with turnovers under $2 million) and individuals. Specifically, the ATO is currently seeking views on its proposed approach to the imposition of penalties in cases where the ATO considers that there has been a failure to take reasonable care or a failure to lodge an activity statement or an income tax return on time.

The ATO’s proposal is that taxpayers should be given one chance before receiving a penalty, that is, no penalty would be applied to the first error or first late lodgment in respect of an income tax return or activity statement that would otherwise be subject to penalty. The one chance timeframe will be refreshed after a set period of time.

Comments can be made to the ATO by 24 October 2016.

Draft regulations for farm management deposits

The Commonwealth Treasury has exposure draft regulations to update and replace existing regulations for farm management deposits. The exposure draft regulations also include consequential amendments to information requirements following amendments to the farm management deposit legislation made by the Tax and Superannuation Laws Amendment (2016 Measures No 1) Act 2016. Comments were due to be made on the draft regulations by 22 September 2016.