The following key Taxation Rulings, Taxation Determinations, Interpretative Decisions and Law Companion Guides have recently been released:
Draft Practical Compliance Guideline 2018/D2 sets out the ATO’s client engagement framework for the diverted profits tax (DPT). It also outlines their approach to risk assessment and compliance activity when the DPT is identified as a potential area of concern.
Taxpayer Alert 2018/1 announces that the ATO are reviewing arrangements that are intended to provide imputation benefits to Australian taxpayers who are not the true economic owners of the shares.
The arrangements involve an Australian taxpayer with a long position in Australian shares legally acquiring, but having little or no economic exposure to, an additional parcel of the same shares and holding those shares over the ex-dividend date. They will typically involve the use of securities lending arrangements in combination with, repurchase agreements or derivative contracts (contracts), to create what is essentially a circular flow of shares. Although the Australian taxpayer has no or only nominal economic exposure to the additional parcel of shares on a stand-alone basis, the Australian taxpayer claims franking credits in respect of both the existing long position and the additional parcel of shares.
That is, taxpayers are relying on an existing long shareholding to claim additional franking credits on a second parcel of shares at zero or nominal risk, such that the franking credits are generally the only return of significance that the taxpayer receives on that second parcel.
Taxation Ruling 2018/2 explains the ATO’s view on record keeping in electronic form for the purposes of section 262A of the Income Tax Assessment Act 1936 (ITAA 1936). It discusses how you must retain and, when required, provide access to electronic records, including encrypted records, records created from e-commerce and records stored in the cloud. It applies to individuals and companies carrying on a business.
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