Draft Taxation Determinations: TD 2021/D2, TD 2021/D3 & TD 2021/D4

The Tax Institute welcomes the opportunity to make a submission to the Australian Taxation Office (ATO) in relation to the following Draft Taxation Determinations (Draft TDs): 

  • TD 2021/D2: Income tax: aggregated turnover — application of the ‘connected with’ concept to partnerships, foreign hybrids and non-entity joint ventures (TD 2021/D2); 
  • TD 2021/D3: Income tax: aggregated turnover — application of the ‘connected with’ concept to corporate limited partnerships (TD 2021/D3); and 
  • TD 2021/D4 Income tax: aggregated turnover — application of the public entity exception to the indirect control test (TD 2021/D4). 

Subdivision 328-C of the Income Tax Assessment Act 1997 (ITAA 1997) was originally introduced as a grouping provision for small business entities. Over recent years, this subdivision has been adapted into various other sections of the tax law, such as the temporary loss carry back and temporary full expensing measures, resulting in the core principles potentially applying to entities with an aggregated turnover of up to (less than) $5 billion. As a result, there is a greater potential for inconsistent outcomes and ambiguities for taxpayers as the fundamentals of Subdivision 328-C are being applied to circumstances they were not originally designed to operate in. 

Accordingly, The Tax Institute welcomes guidance on the application of the various tests and concepts in Subdivision 328-C, such as the ‘connected with’ test located in section 328-125. We consider that the guidance in the Draft TDs should be expanded to include other common circumstances that impact taxpayers, including partnerships with fixed income distributions and discretionary trusts. We note that this additional guidance may be in the form of other guidance products, such as new TDs. This extra guidance is crucial to ensuring that taxpayers can navigate the complexities and consistently apply the concepts to their circumstances. 

Submission prepared by:

The Tax Institute

Submitted to:

David Stevenson 
Senior Director 
Public Groups & International 
Australian Taxation Office 

For more information, contact:

Abhishek Shekhawat
Associate Tax Counsel, The Tax Institute
(02) 9017 8973