CPA Australia Tax News

Latest Updates

New Ministerial power expanding agents’ Code obligations

The TPB issued a media release today about the new Ministerial power to expand the obligations in the Code of Professional Conduct (Code).

From 1 August 2024 tax practitioners will need to comply with 8 additional obligations that will supplement the existing obligations under the Code. Members should note that the TPB will be consulting on draft guidance relating to the new Code obligations progressively, starting in the coming weeks.

The additional obligations are:

Honesty and integrity

• Upholding and promoting the ethical standards of the tax profession.
• False or misleading statements.

Independence

• Conflicts of interest in dealings with government.

Confidentiality

• Maintaining confidentiality in dealings with government.

Competence

• Keeping of proper client records.
• Ensuring tax agent services provided on your behalf are provided competently.

Other responsibilities

• Quality management systems.
• Keeping your clients informed of all relevant matters.

 

Division 7A – Commissioner's discretion

The ATO is clarifying the application of the Commissioner's discretion to disregard the operation of Division 7A, or to allow a deemed dividend to be franked.

It says the discretion may only be granted if an honest mistake or inadvertent omission has resulted in a breach of Division 7A and the circumstances support the exercise of the discretion.

Reliance on professional advice does not always constitute an honest mistake or inadvertent omission. The adviser's actions must have contributed to the breach and the client's reliance on the advice must have been reasonable.

 

Submission: Regulation of Accounting, Audit and Consulting Firms

In response to Treasury’s Consultation Paper on the Regulation of Accounting, Audit, and Consulting Firms, CPA Australia addressed concerns about governance, audit independence, and overall regulation.

We emphasised that any regulatory changes should avoid impacting small and medium-sised firms that are already well-regulated and not the primary focus of Treasury’s concerns.

We believe existing laws and professional standards sufficiently manage conflicts of interest and maintain auditor independence. While we lack statutory powers, our collaboration with statutory regulators ensures the effectiveness and reliability of services provided by our members.

Superannuation and Financial Planning

Important changes to super

The ATO has highlighted important changes to super from 1 July 2024. These are:

• super guarantee rate increased to 11.5% (previously 11%)
• the concessional super contributions cap increased to $30,000 per year (previously $27,500)
• the non-concessional super contributions cap increased to $120,000 per year (previously $110,000)
• the maximum super contribution base, for employers increased to $65,070 for the 2024-25 financial year (previously $62,270).

Changes to NALI for SMSFs

The ATO says changes to the non-arm's length income (NALI) are now law and take effect from 1 July 2024. The new NALI rules for non-arm's length expenses apply to both SMSFs and small APRA-regulated funds with 6 or fewer members.

The changes:

• limit the amount of NALI arising from a non-arm's length general expense for small superannuation funds to twice the difference between the actual expense and the expected market rate of the expense
• exempt large APRA regulated funds from the non-arm's length expenditure (NALE) provisions for both general and specific expenses of the fund, and the NALI rules continue to apply
• exempt the application of the NALE provisions, as amended by the Act, for expenditure that occurred prior to the 2018–19 income year
• apply from 1 July 2018.

ASIC reminder for experienced provider pathway

ASIC is reminding AFS licensees they are required to lodge a notice where they have received a written declaration from a financial adviser who is eligible to access the experienced provider pathway.

Legislation

Legislation for global and domestic minimum tax for MNEs

The government has introduced Bills to implement the minimum taxes under the OECD/G20 Two Pillar Solution. Taxation (Multinational - Global and Domestic Minimum Tax) Bill 2024 – implements the framework for imposition of top-up tax for the Income Inclusion Rule ("IIR"), Undertaxed Profits Rules ("UTPR") and the Domestic Minimum Tax ("DMT").

• Taxation (Multinational - Global and Domestic Minimum Tax) Imposition Bill 2024 – imposes top-up tax: Australian DMT tax, Australian IIR tax and Australian UTPR tax.
  
• Treasury Laws Amendment (Multinational - Global and Domestic Minimum Tax) (Consequential) Bill 2024 – contains consequential and miscellaneous provisions for the administration of top-up tax.

DATE OF EFFECT: The Australian DMT tax and Australian IIR tax apply on or after 1 January 2024. Australian UTPR tax applies on or after 1 January 2025.

The Bills have been referred to the Senate Economics Legislation Committee to report by 14 August 2024. The subordinate legislation has not been released and can only be registered once the primary legislation is enacted. Affected groups will need to monitor the enactment of legislation and assess the financial reporting implications in the second half of this year.

Send your comments by 15 July 2024 to: [email protected]

Expanding TPB Code of Conduct

Treasury has registered the Tax Agent Services (Code of Professional Conduct) Determination 2024. The Instrument supplements the Code of Professional Conduct and outlines the high professional and ethical standards expected of tax practitioners.

Enhanced TPB register

The government has registered the Tax Agent Services Amendment (Register Information) Regulations 2024, giving effect to three recommendations to lift the functionality and utility of the TPB Register and four ways to update the Tax Agent Services Regulations 2022.

DATE OF EFFECT: 5 July 2024.

Rulings and Guidance

Superannuation income streams

The ATO issued an Addendum to TR 2013/5, with effect from 1 July 2007, its ruling on when superannuation income streams commence and cease, with new commentary on successor fund transfers and transfer balance caps.

Rulings

The ATO issued the following rulings:

TD 2024/4 (Hybrid mismatch rules: liable entities and hybrid payers)

CR 2024/37 (Calima Energy Limited – return of capital).

CR 2024/38 (Best & Less Group Holdings Pty Limited - employee share scheme - disposal of shares) – the ATO allows the minimum holding period to end at an earlier time.

CR 2024/39 (EROAD Australia Pty Ltd – Fuel Tax Credits Solution).

PR 2024/11 (Utmost Executive Investment Bond) – the Executive Investment Bond is an eligible life assurance policy for the purposes of s 26AH of the ITAA 1936.

The ATO withdrew TD 2018/11 (reasonable travel and overtime meal allowance expense amounts for 2018-19) as its date of effect has ceased.

Cases

Appeals update: Merchant (Pt IVA and capital loss)

The taxpayer lodged a notice of appeal to the Full Federal Court against the decision of Thawley J in Merchant v FCT [2024] FCA 498. The Federal Court had concluded that Pt IVA applied to a scheme where a family trust made a capital loss on the sale of shares and that the forgiveness of certain debts amounted to a scheme in the nature of dividend stripping.

Decision to terminate tax agent's registration not stayed

The AAT has refused to order a stay of a Tax Practitioners Board decision to cancel a tax agent's registration as the applicant's prospects of success did not appear to be strong, among other issues. (Colin and Tax Practitioners Board [2024] AATA 2151, AAT, Benk SM, 28 June 2024.)