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ATO Releases – Rulings/Determinations

Tax Telegraph, June 2013

ATO Releases – Rulings/DeterminationsParent company's market support payments not deductible

The ATO has released a draft Tax Determination (TD), TD 2013/D3, which expresses the ATO's preliminary view that support payments made by a parent company to a subsidiary are capital in nature and not deductible (under either the general deduction provisions or the "black-hole" provisions) but are included in the cost base of the parent company's shares in the subsidiary.

The examples provided in the draft TD indicate that the reason why the ATO considers the support payments are of a capital nature is because they are objectively made to maintain the capital value of the parent company's shares in the subsidiary company.

Administrative treatment on Loss carry-back measures

The ATO has announced its administrative treatment for taxpayers who are early balancers with substituted accounting periods who wish to claim the loss carry-back tax offset prior to enactment of the proposed measures contained in Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013.

This bill was introduced into Parliament on 13 February 2013 and has not yet been passed by the House of Representatives. The ATO has advised that taxpayers (including early-balancers with substituted accounting periods) should not claim the loss carry-back tax offset until the measure has received Royal Assent. Once the measure has received Royal Assent, the ATO will advise taxpayers regarding how they can claim the loss carry-back tax offset if they have already lodged their 2013 income tax return.

General anti-avoidance rules (Part IVA) amendments

The ATO has announced its administrative treatment of arrangements which have been commenced or entered into between the date of announcement of the proposed amendments to Part IVA (i.e. 16 November 2012) and subsequent enactment of those amendments (date unknown).

The ATO has advised that if a taxpayer enters into an arrangement in accordance with the existing law, and Part IVA is subsequently applied as a result of the retrospective legislation change, interest and penalties will be remitted unless the case especially warrants different treatment.

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