Birchstone Brief for the week ended 12 February 2021

ATO Updates

Practical Compliance Guideline PCG 2021/2 – Calculating fuel tax credits for heavy vehicles

The ATO has released Practical Compliance Guideline PCG 2021/2 which provides a simplified apportionment method for calculating fuel tax credits for diesel acquired and used in ‘heavy vehicles’ for small fuel tax credit taxpayers. A taxpayer’s fuel tax credit entitlement is reduced by the amount of the road user charge to the extent that the fuel is used for travel on a public road. The use of the simplified method is not mandatory but aims to reduce compliance costs.

The Guideline applies to diesel acquired on or after 1 October 2020.

Single Touch Payroll options for small employers with closely held payees: ATO guidance

The ATO has released details in relation to the reporting obligations that small employers (19 or fewer employees) with closely held (related) payees will have from 1 July 2021. Small employers with closely held payees were exempt from reporting these payees through STP for the 2019-20 and 2020-21 financial years.

From 1 July 2021, the small employers must comply with the reporting obligations and can do so in any of the following ways:

• actual payments on or before the date of payment – whenever you make a payment to a closely held payee, report the information on or before each pay event;
• actual payments quarterly – report your actual payments to closely held payees quarterly; and
• a reasonable estimate quarterly – report reasonable year-to-date amounts for their closely held payees quarterly.

Decision Impact Statement on Commissioner of Taxation v Douglas [2020] FCAFC 220 – Tax treatment of ADF invalidity payments

The ATO has issued a decision impact statement on the decision handed down in Commissioner of Taxation v Douglas [2020] FCAFC 220 (summarised in the Birchstone Brief for the week ended 11 December 2020). The decision impact statement deals with invalidity benefits paid under pensions provided under the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme.

The ATO updated their ‘Tax on benefits’ and ‘Treatment of military invalidity benefits’ webpages to reflect the Court’s decision.

Class Rulings

The ATO has issued the following class rulings:

• CR 2021/11 – Village Roadshow Limited – disposal of shares;
• CR 2021/12 – Salary Packaging Australia Pty Limited – benefits provided to fly-in fly-out employees; and
• CR 2021/13 – GetSwift Limited – exchange of shares for GetSwift Technologies Limited shares and amendment of options and employee awards.

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State Taxes

ACT Budget 2020-21: Tax-related measures

The ACT Government has announced a number of tax-related measures as part of their 2020-21 Budget, including:

• A land tax exemption incentive for landlords renting their properties at below 75% of the market value through a registered community housing provider;
• payroll tax deferrals for universities for up to 24 months from 1 January 2021, capped at $10 million;
• payroll tax exemption for new apprentices or trainees employed after 1 August 2020 extended to 30 June 2021; and
• payroll tax waiver extension for businesses severely impacted by COVID-19.

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Cases

ZCSB V FCT [2021] AATA 138 – Medical practitioner denied release from tax debt

The AAT has denied a taxpayer from being released from his tax liabilities on grounds of serious hardship. The taxpayer was a medical practitioner who incurred a substantial tax debt of over $1.1 million. The taxpayer argued that he would suffer serious hardship if he was required to satisfy his tax liability, and applied to the AAT for review of the Commissioner’s decision not to release the taxpayer from his tax liabilities. 

The AAT found that the taxpayer would not suffer serious hardship in meeting his tax debt. The taxpayer and his partner, also a medical practitioner, were found to have substantial annual gross household income. There was scope for the taxpayer’s household to reduce their annual expenditure, including a reduction in private school fees and accessing cheaper rental accommodation. The AAT stated that a reduction in the taxpayer’s household expenditure would allow him to provide necessities for his family and still leave a surplus to meet the tax debt in a reasonable time without suffering hardship.

Appeals

The High Court of Australia has granted the taxpayer special leave to appeal from the Full Federal Court’s decision in FCT v Addy [2020] FCAFC 135 (the ‘backpacker tax’ case).

The High Court of Australia has refused to grant the Chief Commissioner special leave to appeal from the decision in Chief Commissioner of State Revenue v Downer Engineering Pty Ltd [2020] NSWCA 126 (payroll tax).

The High Court of Australia has refused to grant Dental Corporation Pty Ltd special leave to appeal from the decision in Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118 (’employee’ for superannuation purposes).

The High Court of Australia has refused to grant the taxpayer special leave to appeal from the decision in FCT v Fortunatow [2020] FCAFC 139 (personal services income).