From Government
- The End of the AAT
The Administrative Review Tribunal (ART) started operations and replaced the Administrative Appeals Tribunal (AAT) on 14 October 2024. The new tribunal functions similarly to the AAT and reviews the same types of decisions. While the Small Business Taxation Division no longer exists, the ART has a new jurisdictional area for “Taxation and Business.” As of 14 October 2024, current AAT matters should have been transferred automatically to the ART. There are no requirements for submitting a new application to the ART for current matters. AAT decisions that have been finalised will not change in the ART. From 14 October 2024, any applications should be made to the ART to review government decisions, including those made prior to this date.
- Review of Tax Promoter Penalty Laws
A consultation paper has been released by Treasury regarding the tax promoter penalty laws (TPPL), with submissions due by 1 November 2024. The promoter penalty provisions within Division 290 of Schedule 1 to the TAA aim to prevent the promotion of tax avoidance and tax evasion schemes.
Civil penalties apply when tax practitioners breach the TPPL, and they may face disqualification by the Tax Practitioners Board (TPB). The consultation examines whether the TPPL operates effectively, deters misconduct, and protects the community, especially in light of recent scandals like the PwC incident. The paper discusses the TPPL’s function, emerging behaviors such as those on social media, and relevant frameworks for promoters of tax exploitation schemes.
- TPB Draft Guidance on TASA Code Changes
The Tax Practitioners Board (TPB) has updated its guidance and released new draft guidance about the new rules under the Tax Agent Services Act 2009, which are part of the 2024 Code of Professional Conduct.
The draft information sheets provide case studies on the practical scope of the new obligations and actions that practitioners must take to demonstrate compliance. Submissions can be made until 21 November 2024. The final guidance may be issued in December 2024, along with other materials to assist with the new obligations.
From Regulators
- Supplementary Annual GST Return 2025
The ATO has released instructions for completing the Supplementary Annual GST Return 2025, which must be lodged by certain public and multinational businesses. Clients who have received one of the following on or before 30 June 2024 must lodge a Supplementary Annual GST Return 2025:
- Top 100 GST Assurance Report
- Top 1,000 Combined Assurance Review Report, with a GST assurance rating
- Top 1,000 GST Streamlined Assurance Review.
Taxpayers who must lodge a return will be notified by the ATO. Those who receive a GST assurance rating after 30 June 2024 must complete the Supplementary Annual GST Return from the 2025-26 year onwards. The return aims to understand governance and GST changes during the year, covering:
- How the client has actioned recommendations, and any red flags or low assurance areas highlighted in the most recent GST assurance review.
- Whether clients have maintained or improved their GST governance since the last review, and if there have been any major changes to their business or systems that affect GST controls.
- How the audited financial statements match up with the annual business activity statements.
- Whether the client made any uncertain GST decisions during this period.
- Whether the client found any significant GST errors, how they were fixed, and whether they claimed any large credits from previous periods.
- Tax Treatment of Buying and Selling ETFs
New guidance has been released by the ATO on the tax treatment of purchasing and selling exchange-traded funds (ETFs). Taxpayers must declare in their tax returns:
- Income from distributions from ETFs
- Income from ETFs that have been reinvested into a Distribution Reinvestment Plan (DRP)
- Capital losses or gains from the disposal of any ETF units.
ETF distributions represent a share of the income of the fund. Based on the assets held by the ETF, the income can consist of different types of income including dividends, interest, capital gains, and franking credits, which must be separately disclosed in the tax return. Australian ETFs provide an annual ETF tax statement which notifies taxpayers of the breakdown of their distributions for disclosure in their tax return.
However, foreign-owned ETFs may not provide this statement, so clients must use their own records to calculate and disclose the foreign income in their tax return. Many ETFs offer DRPs to investors, allowing them to reinvest the distribution to buy additional units in the ETF. The distribution income is assessable in that year, according to the ATO.
- Achieving Certainty with the ATO
The ATO encourages taxpayers to engage with them to achieve certainty regarding the tax implications of commercial deals and to avoid future compliance actions. The ATO’s commercial deals service allows taxpayers to engage with the ATO after completing a transaction, prior to the lodgment of the tax return. This service aims to help taxpayers and the ATO reach mutual agreement on the tax implications of the deal and resolve tax issues before lodgment.
The commercial deals service can be used in several situations, including business transactions that could affect the structure of the business, such as:
- Financing and refinancing
- Initial public offerings
- Mergers and acquisitions
- Restructures
- Sale of business (partial or complete) or business assets
- Sale of commercial property
- Share buybacks
- Updated Guidance on Compassionate Release of Super
The new guidance outlines the five main grounds for eligibility for the compassionate release of superannuation:
- Medical treatment for the applicant or their dependent
- Accommodating a disability for the applicant or their dependent
- Palliative care for a terminal illness for the applicant or their dependent
- Funeral expenses for the applicant’s dependent
- Preventing foreclosure or forced sale of the applicant’s home.
- ATO Targeting Unpaid Tax and Super
The ATO is adopting a new approach for businesses that ignore ATO SMS and letter correspondence related to unpaid tax and superannuation liabilities. If businesses don’t engage with the ATO or set up a payment plan for unpaid GST, pay-as-you-go withholding, or employee super obligations, the ATO will move to firmer actions such as garnishee arrangements and Director Penalty Notices.