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ATO Releases – Rulings/Determinations

Tax Telegraph, February 2013

ATO Releases – Rulings/DeterminationsRevised ATO large business and tax compliance booklet

On 6 December 2012, the ATO launched a revised Large business and tax compliance booklet. The booklet outlines the ATO’s current thinking on its approach to tax compliance in the large business market. It emphasises that the ATO is committed to administering the tax system in real time. The Commissioner says in the foreword that the implementation of the ATO’s risk differentiation framework has been a game changer. However, there is a more critical message in the booklet. Figures in the booklet reveal that in the last 2 years, the proportion of total company tax paid by large business taxpayers has fallen from 63% to 43%. This represents an alarming drop in the total tax contribution made by large business.

The booklet proceeds to explain how the new reportable tax position schedule and pre-lodgement compliance reviews will assist in identifying and assessing tax risks in real time. While the Commissioner says this is about the ATO providing faster and comprehensive clarification of issues, the key message for clients is that the ATO are putting large businesses on notice that the ATO is able to identify issues for review and audit much faster than ever before.

As a result, we can expect that the ATO will engage in more focussed, targeted and invasive audit activity.

Assessability of amounts received to reimburse legal costs incurred in disputes concerning termination of employment

TR 2012/8

Amounts received to reimburse legal costs incurred in disputes concerning termination of employment neither form part of an eligible termination payment (ETP) nor fall within the meaning of 'fringe benefit' in subsection 136(1) of the FBTAA 1986. A settlement or award in respect of legal costs will be an assessable recoupment under section 20-20 of the ITAA 1997 if the recipient is entitled to a deduction for legal costs under section 8-1 of the ITAA 1997.

GST and points fee in a loyalty program

ATO ID 2013/1

ATO ID 2013/1 addresses whether a loyalty program operator makes a taxable supply to a program partner where it allocates points to nominated customers of the loyalty program partner in return for a points fee, and those points would be redeemed by the nominated customers for vouchers which are subject to the modified rules in Division 100 of the GST Act. The loyalty program operator is making a taxable supply of points to the program partner to the extent that the points would be redeemed for Division 100 vouchers and those vouchers would not be redeemed for supplies which are GST-free or input-taxed.

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