15 Apr 11 NTLG Consolidations
Tax Counsel Tamera Lang ATIA, Peter Murray FTIA (KPMG), Michael Charles FTIA (KPMG) and Ken Spence FTIA (Life)(Greenwoods & Freehills) represented The Tax Institute at the NTLG Consolidation Sub-committee meeting on 13 April 2011. The meeting largely consisted of updates on action items and a brief discussion of the ATO’s administrative approach following the recent announcement of the Board of Taxation’s (BOT) review into “rights to future income” (RTFI).
The ATO advised that they will be finalising their McIntosh decision impact statement and relevant Consolidation Reference Manual updates in the coming weeks. They are also seeking to finalise an updated fact sheet on consolidation and franking deficits tax.
Treasury advised that they are aware of the TIES issue that was lodged by the group about the time period to amend assessments to reflect retrospective law changes made by Tax Laws Amendment (2010 Measures No 1) Act 2010 (TLAA1 2010). The issue is within the scope of the TIES program, and should be included in general technical amendments bill. The group urged Treasury to include it in the technical amendments bill that is planned for June 2011, but Treasury was uncertain whether this could realistically be achieved.
The ATO advised that they have decided their administrative approach to RTFI issues. A formal announcement of this plan will be announced on the ATO website shortly (the material on the ATO website will reflect the advice given to staff on 12 April 2011). In broad terms, the ATO’s approach is as follows: the BOT review is completely independent on ATO’s administration of the existing law as enacted. There are two existing priority technical issues (PTIs) which touch on various aspects of the rules, and the ATO is working to finalise its interpretative position. Until there is a settled ATO view on the RTFI PTIs, the following administrative approach will be taken by ATO officers.
Requests for private binding rulings (PBRs)/objections – applicants who have lodged an objection/PBR will be contacted and advised that there may be some delay in the advice, if the issue concerns the RTFI PTIs. The ATO will “hold” the request until the interpretative view is finalised.
Requests for amended assessments – the ATO will be reviewing, on a risk basis, to see if there are technical issues with the amendment requests they have on hand. If they locate such amendment requests, they will hold them until their interpretative view is finalised. They will advise taxpayers of the reason for the delay and make them aware of the BOT review process. If a taxpayer wants an amendment request to proceed, the ATO will make “best efforts” to promptly determine their interpretative view.
Compliance activities – there will be no compliance action taken until the interpretative views are finalised. Compliance action on other consolidation issues will continue as normal.
If advisers are lodging amendment requests that do not contain contentious RTFI issues, it is recommended that this is clearly stated in the amendment request as this will assist the ATO.
This approach is as per the advice given to the NTLG Consolidations Sub-committee. Members should refer to the ATO official guidance when it is released on the ATO website.