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100A draft driven by demand, says ATO
23 March 2022
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Taxpayers, their advisers and professional associations were the geneses for the ATO’s recent section 100A draft guidance, deputy commissioner private wealth Louise Clarke said.
“Section 100A has been a standing agenda item on the Private Groups Stewardship Groups since the 2014 factsheet was released,” Ms Clarke said on LinkedIn, echoing a webinar for CA ANZ last week.
“The ATO has raised the application of section 100A in cases since then and that has led to calls for more detailed guidance, particularly the meaning of the exception in section 100A for arrangements that are an ‘ordinary family or commercial dealing’.
“The draft guidance was ready for release in August 2021 but was deferred after consultation with practitioners and professional associations in recognition of the impacts of COVID.”
Ms Clarke said the draft Practical Compliance Guideline on 100A covered how the Commissioner would apply compliance resources and provided clarity on when the ATO was likely to review an arrangement that was entered into before and after the release of the guidance.
The Commissioner would stand by the administrative position reflected in the previous fact sheet published in 2014 for trust distributions made on or before 30 June 2022.
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When it came to compliance around retrospective application, Ms Clarke said the ATO was not developing a compliance program to commence looking at cases that predate 1 July 2014.
“The Commissioner will only apply compliance resources to review arrangements which pre-date 1 July 2014 in limited specific circumstances, such as fraud or evasion,” she said.
“Our experience is that most taxpayers do not engage in arrangements where section 100A could apply so the number of potentially impacted taxpayers with pre-1 July 2014 arrangements is very small.”
The ATO would also continue to administer 100A consistently with the 2014 fact sheet where it was more favourable than the draft PCG up to 30 June 2022.
“Having said that, we have applied section 100A in our compliance activities to arrangements over the past several years and we intend to continue to review arrangements where section 100A may apply,” Ms Clarke said.
Ms Clarke said a taxpayer alert that referred to possible promoter penalties was not intended to obstruct accountants from advice.
“All our taxpayer alerts include statements about the potential penalties where an agent promotes a scheme. Those rules are not intended to obstruct agents from giving typical advice to their clients and do not apply where there is a reasonably arguable position,” she said.
“The reference also should not be construed as an indication that we are embarking on a project to specifically seek out these arrangements so that agents can be referred to the TPB.”
The ATO is currently seeking feedback from taxpayers and practitioners on the draft guidance, with a consultation period until 8 April 2022.
Ms Clarke said the amount and substance of the feedback would determine the date for finalisation of the guidance.
“We are expecting a lot of feedback,” she said.
“We would prefer to finalise the draft Division 7A guidance as close to the start of the 2023 income year to provide the community with certainty. However, we will not rush the finalisation of the guidance and will properly consider all feedback provided.”
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