Board of Taxation

Review of Granny Flat Arrangements

ben — Wed, 20 May 2020 04:14:36 +0000

Review of Granny Flat Arrangements ben Wed, 20/05/2020 - 14:14

Background

On 29 November 2018, the Australian Government announced that the Board would undertake a review of the tax treatment of granny flat arrangements. The request was partly made in response to the 2017 Australian Law Reform Commission’s (ALRC) report: Elder Abuse – A National Legal Response.

The Board’s review involved assessing the tax circumstances surrounding the making of formal, written and legally enforceable family arrangements where, at its simplest, older Australians transfer title to their home, or proceeds from the sale of their home, to their adult child or another trusted person in return for the promise of ongoing housing and care.

Terms of Reference

From the Assistant Treasurer’s press release on 29 November 2018:

The Morrison Government has requested the Board of Taxation undertake a review of the tax treatment of granny flat arrangements and recommend any potential changes.

The review will consider and make recommendations on the appropriate tax treatment of these arrangements, while considering the interactions between the current tax laws and treatment of ‘granny flat interests’ under the social security rules.

In making the recommendations, the review will consider how any changes could raise awareness and provide incentives for older people and their families to enter formal and legally enforceable family arrangements.

The Board is expected to commence the review in early 2019, including broad consultation with stakeholders, with a final report due to the Government in the second half of 2019.

Consultation process

Over the course of the review, the Board consulted widely with experts in this area, including with members of the Elder Law and Succession Law Committee of the Law Council of Australia. The Board is very grateful for their insights, expertise and commitment of time.

The Board appointed a Working Group of its members led by Mr Craig Yaxley as chair, and Mr Neville Mitchell and Mr Peter Quiggin PSM to oversee this review. Former Member and CEO, Ms Karen Payne led the review the outset of the Review before being appointed as Inspector-General of Taxation and Taxation Ombudsman.

Board Report

The Board completed its review of and provided its report to government in November 2019.

Government response

On 5 October 2020, the Government released the Board’s report on the taxation of granny flat arrangements, announcing a targeted CGT exemption for the creation, variation and termination of granny flat arrangements where a formal, written agreement is put in place. The exemption will apply from 1 July 2021, subject to legislation passing.

Further information

For further information about the Board’s review of granny flat arrangements, please contact the Board of Taxation Secretariat at taxboard@treasury.gov.au or (02) 6263 4366.

Review of the Tax Treatment of Digital Assets and Transactions in Australia

vicky — Sun, 20 Mar 2022 23:15:01 +0000

Review of the Tax Treatment of Digital Assets and Transactions in Australia vicky Mon, 21/03/2022 - 10:15

Background

On 8 December 2021, the former treasurer tasked the Board of Taxation (Board) with a review of the tax treatment of digital assets and transactions (crypto assets) in Australia. This was part of a broader response to a review of the Australian payments system and the regulation of digital assets.

The former government released the terms of reference for the review on the 21 March 2022. These terms of reference were confirmed by the government in August 2022.

Terms of reference

With reference to Australia’s strong competitive position as an early adopter of digital innovations relative to other jurisdictions, the scope of digital transactions and assets, and without increasing the overall tax burden, the Board is asked to:

consider the current Australian taxation treatment of digital assets and transactions and emerging tax policy issues
consider the awareness of the taxation treatment by both retail and wholesale investors and those transacting in digital assets as part of their business
consider the characteristics and features of digital assets and transactions in the market, including the rapid evolution of technology supporting the broader digital asset ecosystem
analyse the taxation of digital assets and transactions in comparative jurisdictions and consider how international experience may inform the taxation of digital assets and transactions in Australia and
consider whether or not any changes to Australia’s taxation laws and/or their administration are warranted in the context of digital assets and transactions, both for retail and wholesale investors.

Working group

The Board appointed a working group to conduct the review.

The working group included at various times Board members Mr Anthony Klein (to the end of his term), Ms Tanya Titman, Ms Andrea Laing, Dr Julianne Jaques KC and Mr Ian Kellock as well as Mrs Rosheen Garnon (Board Chair).

In addition, the working group comprised of specialists in taxation and digital assets across academia, the tax profession and digital asset industry, and officials from The Treasury and the Australian Taxation Office.

Consultation

Guide

In August 2022, the Board published a Consultation Guide which provides an overview of crypto assets and the current taxation treatment within Australia.

The guide outlined relevant government reports and announcements. It also posed questions for interested parties to consider in their review submission.

Process

The Board held consultations throughout September 2022 attended by representatives from:

the tax profession
academia
crypto exchanges and platforms
software providers
retail and wholesale investors.

Following the initial public consultation process, the Board undertook extensive consultation in Australia and with international revenue authorities.

Report

The Board delivered its report to the government on 23 February 2024.

As is standard protocol, publication of the Board’s report is a matter for government.

Submissions

The Board received 41 written submissions, including 2 confidential submissions.

The Board thanks the many representatives who participated in our consultation process.

More information

If you have questions about the review, contact the Board of Taxation Secretariat at TaxDigitalAssets@taxboard.gov.au

Review of GST on low value imported goods

ben — Thu, 01 Jul 2021 02:48:30 +0000

Review of GST on low value imported goods ben Thu, 01/07/2021 - 12:48

On 5 July 2021 the Government announced that the Board of Taxation would undertake a review into the Low Value Imported Goods (LVIG) measure which facilitates the addition of Goods and Services Tax (GST) on low value imported goods.

The Board assessed the effectiveness of the LVIG regime and provided advice regarding its ongoing operation.

Background

Before 1 July 2018, goods imported directly by consumers costing $1,000 or less did not attract GST. High value goods with a customs value over $1,000 were assessed and charged GST at the border.

From 1 July 2018, GST was applied to low value goods using a vendor registration model. This model requires suppliers, online platforms and re‑deliverers with an Australian GST turnover of $75,000 or more to register, collect and remit GST to the ATO. Suppliers can also access the simplified GST registration and reporting system. The existing processes to collect GST on imports above $1,000 at the border remain unchanged.

At the announcement of this measure in the 2016‑17 Budget, the Government also announced that the LVIG regime would be reviewed after two years to ensure that the regime was operating as intended and to consider any international developments. The Board was requested to undertake this review with the following terms of reference.

Terms of Reference

The Board of Taxation was asked to do the following:

Assess the effectiveness of the LVIG regime to efficiently collect GST with reference to the policy intent of the law that low value goods imported by consumers face the same tax regime as goods that are sourced domestically. In doing so, the review will:
1.1 assess the effectiveness of the administration of the measure;

1.2 assess industry compliance with the LVIG rules;

1.3 undertake a targeted external consultation process, working closely and collaboratively with the Treasury, Australian Taxation Office, and Australian Border Force;

1.4 examine the issues identified in the consultation process; and

1.5 provide any observations, findings, and appropriate recommendations for improvements and certainty to the ongoing operation of the LVIG regime.
Report on and assess any relevant international developments and experiences regarding the collection of GST and other consumption taxes on LVIG.

Working Group

The Board appointed Board members Dr Julianne Jaques QC and Tanya Titman to lead the review. They were assisted by a working group comprising industry experts, members of the tax profession, and representatives of the ATO, the Treasury, and Australian Border Force. Throughout the review process the working group conducted targeted consultation with stakeholders in the business community and government.

Consultation

The Board published a Consultation Guide to explain the review process and guide stakeholders on how to contribute. It also posed a number of questions for interested parties to think about when formulating input to the review.

The Board held a number of virtual consultation meetings attended by representatives of tax profession, domestic and foreign retailers, and specialists in ecommerce, freight forwarding, logistics and customs processes. The Board also received eight written submissions (with two being confidential).

The Board would like to thank the many tax professionals and industry body representatives who participated in our consultation process.

Submissions received

Submitter	Download
Alibaba Group	100KB
Australian Retailers Association	145KB
Australian Small Business and Family Enterprises Ombudsman	272KB
Chartered Accountants Australia and New Zealand	213KB
Conference of Asia Pacific Express Carriers	958KB
Freight and Trade Alliance	120KB

Board Report

The Board completed its report on 17 December 2021.

Government Response to the Board’s Report

On 29 March 2022, the Government announced the publication of the Review of GST on low value imported goods report. The Government and relevant regulators will consider the Board’s recommendations and findings in the report.

Further Information

For further information about the Board’s report: Review of GST on low value imported goods, please contact the Board of Taxation Secretariat at taxboard@treasury.gov.au or 02 6263 4366.

Budget 2021–22 – A statement by the Chair

ben — Fri, 14 May 2021 04:27:42 +0000

Budget 2021–22 – A statement by the Chair ben Fri, 14/05/2021 - 14:27

R&DTI – Review of the dual-agency administration model

ben — Wed, 10 Mar 2021 04:09:23 +0000

R&DTI – Review of the dual-agency administration model ben Wed, 10/03/2021 - 15:09

On 11 May 2021, the Government announced that the Board of Taxation (Board) would undertake a review to evaluate the dual‑agency administration model for the Research and Development Tax Incentive (R&DTI).

Background

The R&DTI program is a self‑assessment program that provides tax offsets for eligible company R&D expenditure. The stated objective of the program is to encourage industry to conduct R&D activities that may otherwise not be conducted, particularly where the new knowledge gained is likely to benefit the wider Australian economy.

The R&DTI is jointly administered by the Australian Taxation Office (ATO) and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources (DISER), with IISA responsible for registering companies' R&D activities and the ATO responsible for the administration and processing of R&D tax offset claims.

Terms of Reference

The Board was requested to evaluate the R&DTI dual agency administration model, with a view to identifying opportunities to reduce duplication between the two administrators, simplify administrative processes, or otherwise reduce the compliance costs for applicants.

The Board was requested to make recommendations to modify the R&DTI’s administrative model or to streamline existing administrative functions or processes. If the Board finds that taxpayers experience difficulty in understanding the different roles and responsibilities of the two administrators, the Board should consider whether education programs or communications would assist.

In conducting the review, the Board:

analysed R&D administration models in other comparative jurisdictions and consider how the international experience may inform improvements to Australia’s R&DTI dual agency delivery model;
consulted with taxpayers to obtain an insight into their experience during the registration and claiming process, including their understanding of the different roles and responsibilities of the ATO and IISA in administering the program;
considered any new and streamlined processes undertaken by the two agencies in response to previous reviews of the scheme’s administration, such as the 2016 Review of the R&DTI and the recent Australian Small Business and Family Enterprise Ombudsman review; and
identified the advantages and disadvantages of its recommendations, any potential financial impacts, and any trade‑offs between simplification and/or reductions in compliance costs and the scheme’s integrity.

Changes to the R&DTI’s broader policy settings, such as eligibility requirements or rates of support, were outside of the scope of this review.

Working Group

The Board appointed Board members Neville Mitchell and Chris Vanderkley to lead the review. They were assisted by a working group comprising industry experts, members of the tax profession, industry body representatives, and representatives of DISER, the Treasury, and the ATO. There was extensive consultation with a wide range of stakeholders in the business community throughout the review process.

Consultation

The Board published a Consultation Guide for stakeholder review and input, to understand their experience during the registration and claiming process of the R&DTI and consider opportunities to streamline existing administrative functions or process. It also posed a number of questions for interested parties to think about when formulating input to the review.

The Board held a number of virtual consultation meetings attended by representatives of tax, accounting and legal professions, industry body representatives, R&D tax consultants and users of the R&DTI program.

The Board thanks the many tax, accounting and legal professionals, industry body representatives, R&D tax consultants and users of the R&DTI program who participated in our consultation process.

Submissions received

The Board received 17 written submissions.

Submitter	Download
01 – Australian Industry Group (Ai Group)	171KB
02 – The Tax Institute	185KB
03 – Australian Investment Council	227KB
04 – Australian Small Business and Family Enterprise Ombudsman (ASBFEO)	701KB
05 – BDO	646KB
06 – Grant Thornton	172KB
07 – Deloitte	236KB
08 – Michael Johnson & Associates	1.7MB
09 – Chartered Accountants Australia and New Zealand (CAANZ)	276KB
10 – Cochlear	571KB
11 – KPMG	1.7MB
12 – Corporate Tax Association (CTA)	5.7MB
13 – EY	207KB
14 – PwC	137KB
15 – Tech Council of Australia	151KB
16 – DISER and the ATO (joint submission)	3.7MB
17 – RSM Australia	180KB

Board Report

The Board completed its report on 30 November 2021.

Government Response to the Board’s Report

On 29 March 2022, the Government announced the publication of the Review of R&D Tax Incentive Dual Agency Administration Model Report. The Government and relevant regulators will consider the Board’s recommendations and findings in the report.

Further Information

For further information about the Board’s report: Review of R&D Tax Incentive Dual Agency Administration Model, please contact the Board of Taxation Secretariat at taxboard@treasury.gov.au or 02 6263 4366.

Review of CGT Roll-overs

AtamDhillon — Wed, 24 Jun 2020 05:20:04 +0000

Review of CGT Roll-overs AtamDhillon Wed, 24/06/2020 - 15:20

In December 2019, the Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar MP announced that the Board of Taxation (Board) would undertake a review of capital gains tax (CGT) roll-over rules.

The purpose of the review is set out in the terms of reference.

The Board provided interim written advice to the Government on 25 March 2021 and will submit a final report by 22 April 2022.

Terms of reference

The taxation law currently allows certain CGT events to occur without crystallising liabilities to tax in circumstances where it is considered appropriate for the CGT liability to be deferred until a later time (i.e. the CGT liability is ‘rolled over’). Over time, the provisions catering for these circumstances have multiplied to the point where navigating the law is difficult.

The Board of Taxation (Board) is requested to identify and evaluate opportunities to rationalise the existing CGT rollovers and associated provisions into a simplified set that have a substantially similar practical effect, but are easier to use and interpret. This may give rise to recommendations to repeal unnecessary rollovers, or express them in a more principled fashion, so that one can do the work of many. In doing so the Board should have regard to the two main categories of rollovers, namely, rollovers where there is no change in underlying economic ownership after the CGT event and rollovers where the disposal is involuntary (i.e. effectively forced upon the taxpayer at a particular time rather than occurring at a time chosen by them).

If the Board comes to the view that the system would benefit from additional categories of rollovers to complement the two key principles above, then the Board may suggest these as options for the Government to consider. In doing so, the Board should ensure that any proposals that defer capital gains tax encourage the active use of assets in the economy and, consequently, support the payment of income tax on profits generated from using those assets (for example, when compared with no change in ownership).

In general, the Board’s proposed principles-based rollovers should simplify the process of giving advice on rollovers and reduce the regulatory burden on affected businesses, while:

protecting the tax system against the risk that any CGT deferral becomes permanent; and
having regard to the overall revenue cost of the system of rollovers and the integrity of the tax system generally.

The Board should identify the advantages and disadvantages of its proposals, any potential revenue cost, and any relevant integrity concerns. The Board should also consider the broader effects of any proposed changes outside of the CGT provisions.

Working Group

The Board has established a working group for the review, comprising Ian Kellock (Chair), Anthony Klein, representatives from the tax profession, academia, Treasury and the ATO. Former Board members, Craig Yaxley, Ann-Maree Wolff and Mark Pizzacalla were also members of the working group during their terms on the Board.

Initial Consultation

In February 2020, the Board published a consultation guide in which it provided an overview of the current suite of roll-overs and the policy considerations that are central to evaluating and improving the framework of roll-over relief. The guide also posed a number of questions for interested parties to think about when formulating input to the review.

The Board received 16 written submissions.

A series of roundtable consultation sessions were conducted including two face-to-face consultations in February 2020 and eight virtual consultations over May and June 2020. The initial consultation period was extended in response to the COVID-19 pandemic.

Second Consultation

The Board published a second consultation paper for stakeholder review and input on 23 December 2020. The paper sets out the Board’s first-stage proposal for rationalising (and replacing) seven of the key roll-overs that deal with the most common business restructuring transactions, including mergers (i.e. takeovers), demergers, and internal reorganisations.

An overview of the second consultation paper is provided in the following information video.

The Board received 23 written submissions. In addition, a series of targeted virtual consultation sessions were conducted over January, February and March 2021.

Submissions received

Submissions made in response to initial consultation

Submitter	Download
Australian Petroleum Production & Exploration Association	921KB
The Association of Superannuation Funds of Australia Limited	557KB
The Association of Superannuation Funds of Australia Limited - Attachment	354KB
Ashurst Australia	195KB
Financial Services Council	470KB
Financial Services Council - Attachment	635KB
Kirk Wilson	167KB
Law Council of Australia	278KB
Minerals Council of Australia	416KB
Property Council of Australia	252KB
Telan Lawyers	339KB
Telan Lawyers - Attachment (Brownlee)	420KB
Telan Lawyers - Attachment (Figot)	0.99MB
The Tax Institute	137KB

Submissions made in response to second consultation

Submitter	Download
Ashurst	364KB
Australian Institute of Superannuation Trustees	196KB
Aware Super	441KB
B J Ghantous & Co Pty Ltd	309KB
BDO	133KB
Charted Accountants Australia and New Zealand	226KB
Cleary Hoare	240KB
Corporate Tax Association	146KB
CPA Australia	341KB
Deloitte	287KB
Deloitte - Appendix C	240KB
Ernst & Young	33KB
Financial Services Council	239KB
Greenwoods	676KB
KPMG	196KB
KPMG - Appendix A	130KB
KPMG - Supplementary submission	103KB
Law Council of Australia	174KB
Minerals Council of Australia	391KB
PwC	252KB
Property Council	225KB
Property Council - Appendix A	114KB
Rockwell Bates	415KB
The Association of Superannuation Funds of Australia Ltd	185KB
The Tax Institute	180KB

Corporate Tax Residency Review

AtamDhillon — Fri, 24 Apr 2020 05:10:06 +0000

Corporate Tax Residency Review AtamDhillon Fri, 24/04/2020 - 15:10

Background

In August 2019 the Treasurer wrote to the Board of Taxation asking the Board to conduct a review of the operation of Australia’s corporate tax residency rules. The purpose of the review is to ensure that the rules are operating appropriately in light of modern, international and commercial board practices and international tax integrity rules.

Terms of Reference

The terms of reference set out by the Treasurer are for the Board to consider whether the existing rules:

minimise commercial uncertainty and ambiguity;
are consistent with and aligned with modern day corporate board practices;
protect the tax system against multinational profit shifting; and
otherwise support Australia’s tax integrity rules as they apply to multinational corporations.

Working Group

The Board has appointed Board member Neville Mitchell to lead the work on this review. Mr Mitchell is assisted by fellow Board members Dr Julianne Jaques and Mrs Ann-Maree Wolff. Representatives from academia, industry and the tax profession will also be assisting in the review.

Initial Consultation

On 6 September 2019 the Board of Taxation published a Consultation Guide on its corporate residency review project, in which it presented six consultation questions for stakeholder comment. The Board received 13 written submissions (with two being confidential) and also conducted roundtable discussions in Sydney, Melbourne and Perth.

Submitter	Download
Powerco	273KB
KPMG	133KB
Pitcher Partners	415KB
Deloitte	100KB
Business Council of Australia & Corporate Tax Association APPEA letter of support Minerals council of Australia	332KB 578KB 30KB
EY	631KB
Corporate Taxpayers Group	240KB
Financial Services Council	465KB
Greenwoods	253KB
Chartered Accountants Australia and New Zealand	289KB
Law Council of Australia	284KB
Joint submission on Draft Taxation Ruling TR 2017/D2	104KB
Joint submission on Practical Compliance Guideline PCG 2018/D3	676KB

Further consultations

The Board published a second consultation paper for stakeholder review and input on 6 December 2019. The paper set out a number of proposed reform options and included additional consultation questions for stakeholder consideration.

The Board received another 13 submissions, including four confidential submissions.

Submitter	Download
Business Council of Australia and Corporate Tax Association	2.21MB
Corporate Taxpayers Group	185KB
EY submission on Incorporation	747KB
EY submission to modify CMAC	725KB
Financial Services Council	148KB
KPMG	82KB
Law Council	567KB
PowerCo	397KB
The Tax Institute	96KB
Pitcher Partners	293KB

Board Report

The Board completed its report in July 2020.

Government Response

On 6 October 2020, the Government released the Board’s report and, in the 2020-21 Budget, adopted the Board’s key recommendation.

The Government will amend the law to provide that a company that is incorporated offshore will be treated as an Australian tax resident if it has a ‘significant economic connection to Australia’. This test will be satisfied where both the company’s core commercial activities are undertaken in Australia and its central management and control is in Australia.

This change will mean the treatment of foreign incorporated companies will reflect the corporate residency position prior to the 2016 High Court decision in Bywater Investments Ltd v Federal Commissioner of Taxation.

It will have effect from the first income year after the date of Royal Assent of the enabling legislation, but taxpayers will have the option of applying the new law from 15 March 2017 (the date on which the ATO withdrew its ruling TR 2004/15).

Further Information

Please contact the Board of Taxation Secretariat at taxboard@treasury.gov.au or +61 2 6263 4366 for more information.

Corporate Tax Transparency Code and Register

mikek — Tue, 14 Jan 2020 00:19:17 +0000

Corporate Tax Transparency Code and Register mikek Tue, 14/01/2020 - 11:19

Post-implementation review of the TTC

The Board commenced a post-implementation review of the TTC in 2018. Following consultation with a wide range of stakeholders, the Board is proposing amendments to the TTC which are outlined in the Consultation Paper released on 26 February 2019.

TTC Consultation Paper [DOCX 658KB | PDF 534KB]

The Board invites interested stakeholders to review the proposed amendments and provide comments to the Board. Instructions on how to make a submission are included in the Consultation Paper. The timeframe for submissions closed on Tuesday 26 March 2019.

The TTC

The Tax Transparency Code (the TTC) is a set of principles and ‘minimum standards’ to guide disclosure of tax information by businesses. the TTC was developed by the Board of Taxation at the Government’s request:

To encourage large and medium-sized businesses to publicly disclose their tax affairs to highlight those that are paying their fair share and to encourage all businesses not to engage in aggressive tax avoidance; and
For large businesses to take the lead, to become more transparent and help educate the public about their compliance with Australia’s tax laws.

Notwithstanding that the TTC is voluntary, the Government expects all responsible large and medium businesses operating in Australia to adopt it.

The Treasurer released the Board’s report to Government A Tax Transparency Code on 3 May 2016.

Role of the ATO

The ATO is responsible for the centralised hosting of published reports provided to the ATO by businesses who have adopted the TTC.

To find out more information about the ATO’s role in administering the TTC please visit their Voluntary Tax Transparency Code page.

Businesses wishing to advise the ATO of the links to their TTC reports can do so by emailing ttc@ato.gov.au.

Draft AASB Guidance

The Board of Taxation requested that the AASB develop guidance to assist businesses meet the TTC recommendations for the suggested tax reconciliation and calculation of an effective tax rate. The AASB has issued draft guidance is in the form of a Draft Appendix to the TTC [ DOCX 140KB | PDF 312KB].

How to access published TTC reports

You can access the links to the published TTC reports as notified to the ATO by signatories that have adopted the Code.

ATO mandatory corporate tax transparency

The ATO has a legislative duty to report information about certain corporate tax entities under section 3C of the Taxation Administration Act 1953 and do this annually through the Report of Entity Tax Information.

Register of Signatories

The signatories to the register below have committed to applying the principles and the details of the TTC. The Board is aware of a number of companies who have internal processes underway to adopt the TTC.

The Board notes that the number of registered entities is likely to differ from the ATO published data (which is based on taxpayer entities rather than taxpayer groups) as a result of the flexibility provided under the Voluntary Code. This makes direct comparisons less meaningful. According to a recent evaluation by the Corporate Tax Association, the current signatories registered with the Board represents more than 60 per cent of taxable income and tax payable by corporate taxpayers who are potentially subject to the TTC. This also illustrates the concentration of corporate tax collections in Australia.

To become a signatory to the Register, please email taxboard@taxboard.gov.au