New tax concession for drought affected farmers 

The Government has announced that it will support farmers investing in fodder storage as part of the instant depreciation initiative. This measure will be available for fodder storage assets first used or installed ready for use from 19 August 2018, and complements the AUD$20,000 instant asset writeoff already available for small businesses. Legislative changes will be made to give effect to this measure. The Australian Labor Party has indicated it will support the announced measures.

ATO’s new data matching programs 

The Australian Taxation Office (ATO) has updated its data matching program to include the following: 

  • Sharing Economy Accommodation 2016-17 to 2019-20 financial years: The ATO will collect data under notice to identify individuals that have, or may be, engaged in providing accommodation services through an online platform. The ATO will also acquire details of all payments made by the platform/s to accommodation providers including payments made by international entities. The data will be acquired for the 2016-17 to 2019-20 financial years. 
  •  Rental Bond 20 September 1985 to 2019-20 financial years: The ATO will collect data under notice to identify individuals that have income tax reporting obligations for income producing properties or have a Capital Gains Tax (CGT) event arising from the sale of real property for the period 20 September 1985 to the 2019-20 financial year. 
  •  Department of Human Services – specified benefits and entitlements 2017-18 to 2019-20 financial years: The ATO will acquire details of individuals in receipt of Paid parental leave payments and Medicare entitlement statements from the Department of Human Services (Centrelink and Medicare) for the 2017-18, 201819 and 2019-20 financial years.

High Court rules in matter regarding distribution of franking credits to trust beneficiary 

The High Court in Federal Commissioner of Taxation v Thomas [2018] HCA 31 has unanimously held that the Full Federal Court had erred in concluding that “directions” given by the Supreme Court of Queensland pursuant to section 96 of the Trusts Act 1973 (Qld) determined the application of Division 207 of the Income Tax Assessment Act 1997 (Cth). The Full Federal Court had held that the beneficiary of the trust was entitled to the benefit of the franking credits for the relevant years, notwithstanding that the allocation of franking credits was disproportionate to the distribution of the franked dividends. The High Court rejected the taxpayers’ ‘alternative construction’ of the resolutions that the franked distributions were ‘notionally allocated’ to match the purported and separate distribution of the franking credits. The Supreme Court of Queensland in the first instance held that trustee resolutions were effective in distributing franking credits to the beneficiaries of the trust. 

Reforms to combat illegalphoenix activity 

Treasury has released exposure draft legislation which gives effect to the Government’s 2018-19 Federal Budget measures to combat illegal phoenix activity. The proposed reforms relate to corporations and tax laws and include specific reforms to: 

  • introduce new phoenix offences that target those who conduct and those who facilitate illegal phoenix transactions 
  • prevent directors from backdating their resignations to avoid personal liability 
  • prevent a sole director from resigning and leaving a company as an empty corporate shell with no director 
  • extend the director penalty provisions to make directors personally liable for their company’s goods and services tax and related liabilities 
  • expand the ATO’s existing power to retain refunds where there are tax lodgments outstanding, and 
  • restrict the voting rights of related creditors of the phoenix operator at meetings regarding the appointment or removal and replacement of an external administrator. 

Comments are due by 27 September 2018. 

Trust vesting  Taxation Ruling TR 2018/6 provides ATO guidance on amending the vesting date of a trust and the consequences of a trust vesting. According to the Ruling, once the vesting date has passed, the trust has vested and it is no longer possible for a trustee to change the vesting date. Although no CGT consequences happen on amending the vesting date through the valid exercise of a power in a trust deed or on approval of a relevant court, the income tax consequences that arise on, and after, the vesting of a trust depend on the terms of the deed. Vesting of itself may, but need not, cause a CGT event to happen. 

Updated FIRB application checklist  The Foreign Investment Review Board (FIRB) has updated its application checklist. An application tax checklist is included as an appendix and identifies the tax information that may be requested by the ATO during the application process. For large investment transactions, particularly infrastructure related transactions, it is expected that certain information will be required by the ATO. 

ATO Corporate plan 2018–19  The ATO has released its 2018-19 Corporate plan that outlines the priorities for the ATO for the year ahead, with strategic objectives that reflect its ambition over the long term, through to 2024. The ATO has developed two aspirations for its journey to 2024 – to build trust and confidence in the tax and superannuation systems and to create a streamlined, integrated and data-driven future.