Residency tests for individuals
The ATO has released a draft ruling on the residency tests for individuals; it consolidates two older rulings. It was indicated in the 2021 budget that it would “replace the individual tax residency rules with a new, modernised framework, and the new framework is to include a simple “bright line” test, such as a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.” Individuals who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria.
Non-commercial losses: flood, bushfire, and COVID-19 impacts
ATO Commissioners may exercise their discretion to allow the offset of losses instead of deferring a loss from a business activity to be offset against future income from the same business activity. Such discretion can be exercised in certain circumstances, including where business activity is affected by special circumstances outside the control of the operators of the activity, including drought, flood, bushfire, or some other natural disaster.
Superannuation
Regulations to support downsizer age reduction
The government has registered regulations that amend the SIS Regulations to give effect to the government’s intention to expand the eligibility for downsizer contributions into superannuation by reducing the eligibility age from 60 to 55 years.
Under pending changes to the downsizer rules in the ITAA 1997, individuals aged 55 or over can make downsizer contributions to their complying superannuation plans from the proceeds of selling their main residence. The regulations support those changes by ensuring that downsizing contributions will be accepted by regulated superannuation funds for members who are 55 years of age or older.
Bookkeeping and OSS
ATO’s view on “market value” of assets for tax purposes: The ATO has updated its online guide to assist taxpayers in understanding its general expectations on market valuation for tax purposes. It includes information on what market value means for tax purposes and the evidence & processes, the ATO looks for a valuation support.
The term “asset” used in the guide includes the following:
- Real property
- Plant and equipment
- Businesses
- Goodwill
- Shares
- Units
- Liabilities
- Benefits provided
- Financial instruments
It is classified into the following categories:
(a) Market value definition for tax purposes.
(b) Who can determine market value? (Setting out who is able to value asset classes)
(c) Valuation standards and valuation fundamentals for tax compliance; and
(d) Review process.
It includes three examples, which deal with the margin scheme (GST), the maximum net asset value test, and market value substitution (non-arm’s length).
