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09 Sep 1111 NTLG International sub-committee update

The Tax Institute, together with other Professional Bodies, have jointly submitted agenda items for the upcoming NTLG International sub-committee meeting scheduled for 20 September 2011.  The agenda items cover the following matters:

  1. Consultation on the Investment Manager Regime (IMR) – the Professional Bodies have requested that the ATO engage in consultation on the proposed IMR via the NTLG International sub-committee. Although the IMR is not an immediate priority for the group (as the Board of Tax is not due to submit their report to the Assistant Treasurer until 30 September 2011) it is likely that there will be a reasonable level of demand from taxpayers for interpretative advice once the design of the IMR is released.
  2. Withdrawal of ATO ID 2011/15 – the Professional Bodies have requested that the ATO explain why ATO ID 2011/15 was withdrawn (this ATO ID deals with the availability of foreign income tax offsets as a result of receiving a distribution originating from a New Zealand unit trust). The withdrawal notice states that the ATO’s current position on the issue is contained in the Guide to foreign income tax offsets. In the Professional Bodies’ view, the guide does not appear to contain anything which contradicts the ATO’s former position in ATO ID 2011/15.
  3. Thin capitalisation and the application of the asset threshold test – the Professional Bodies have asked for clarification of how the 90% asset threshold test operates where an entity undertakes foreign investment through a jointly owned foreign entity. 
  4. Withdrawal of ATO ID 2008/117 and replacement ATO ID 2011/35 – the Professional Bodies have request clarification about the ATO’s comments in the replacement product. In particular, we seek clarification on the requirements of “carrying on a business” and “through a fixed place” which are relevant to the s.23AH exemption.
  5. TD 2008/24 and the consequences of the withdrawal of ATO ID 2010/8 – the Professional Bodies would like the ATO to address  the differences (if any) between the facts described in TD 2008/24 (in particular, paragraph 22 which deals with dividends paid to a corporate limited partnership) and the recently withdrawn ATO ID 2010/8.

The withdrawal of ATO ID 2010/8 has concern for a number of our members. The withdrawal notice simply states that the decision “does not accurately reflect the ATO view”.  At the last meeting of the NTLG International sub-committee (held on 19 July), the ATO informed the Professional Bodies that in its view, the beneficial ownership test in s.334A does not require a partner in a partnership to be in exactly the same position as a shareholder of a company. Further, the taxpayer will be taken to be the beneficial owner of the shares in the corporate limited partnership for the purposes of s.334A because the taxpayer is the owner of the interest in the partnership and is the owner for their own benefit and not for the benefit of others.  It is hoped that this explanation will be confirmed in the minutes (which as the time of writing had not been released on the ATO website).

If you would like further information on the agenda items that have been submitted, or the ATO’s explanation for withdrawing ATO ID 2010/8, please contact us at Tax Policy.

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