Become a Member
Membership
Education
Events
Resources
Tax Knowledge Exchange
About us
Contact us

Draft Taxation Determination TD 2019/D1 - Joint Submission

Published:

   

The Taxation Law Committee of the Business Law Section of the Law Council of Australia joint with The Tax Institute welcome the opportunity to provide a submission on the Australian Taxation Office's (ATO) Draft TD 2019/D1 “What is a restructuring for the purposes of subsection 125-70(1) of the Income Tax Assessment Act 1997?” (the Draft TD).

Introduction – A change in view

The ATO has taken an expanded view of what can form part of a restructure, which it justifies on the basis of the history to Division 125 and a conclusion that it should be limited to only certain kinds of arrangements.

The ATO makes it clear in the Draft TD that it applies both prospectively and retrospectively.

However, it is clear from the publicly available class rulings, in the form of CR 2013/23 and CR 2008/74 that there has been a shift from a permissive view which was public in 2008-2013, with no public change in view from then, until 2018 where a more restrictive view has been taken (refer CR 2018/7 and CR 2018/31), now explained in the Draft TD.

It is entirely understandable for taxpayers and tax advisors to have had a view on the interpretation of Division 125 that differed to that in the Draft TD.

While the ATO correctly notes that the views expressed in a class ruling are binding only on those the subject of the ruling, it is entirely appropriate for taxpayers to have regard to public views of the ATO in managing their tax affairs. In a system of self-assessment, with no requirement to obtain ATO approval for a demerger, it is possible that taxpayers adopted a view that a narrower definition of 'restructuring' applied and as a result the “nothing else” and “proportionality tests” were satisfied.

We respectfully request that this be addressed.

Without an understanding of how this can be reconciled, we request at the very least that this Draft TD, once finalised, operates prospectively from the day that the Draft TD was released.

Submission prepared by:

The Tax Institute

Taxation Law Committee of the Business Law Section of the Law Council of Australia

 

Submitted to:

Japheth Gill

Advice and Guidance

Public Groups & International