We could have done better with 100A, says ATO

The tax office said it was aware of the issues raised by the profession in Section 100A and was seeking to address them in the final guidance.

It follows clarifying comments from the ATO, welcomed late last week by the Deputy Treasurer, that the draft guidelines “would not apply retroactively”.

“Confirmation that taxpayers can continue to rely on the 2014 guidelines for issues that arose while these guidelines were in place will be welcomed by small businesses that have followed these guidelines in good faith,” Sukkar said. .

He also welcomed a clarification from the ATO that ordinary consultancy services provided in exchange for a consultancy fee were not subject to the developer penalty provisions.

The Draft Section 100A Guidelines (Draft TR 2022/D1 and draft PCG 2022/D1) has provoked angry reactions from tax practitioners since its publication in February and the ATO recently extended the deadline for filing comments on the matter.

Speaking at a Tax Institute webinar late last week, the ATO’s chief tax adviser, Fiona Dillon, said the ATO was seeking to allay practitioners’ concerns ahead of finalization. instructions.

“Obviously we could have explained the proposed Section 100A better because it’s not a document that applies to the majority of situations,” she said.

“What we will need to do now is listen seriously to the concerns that have been raised and see how we can express our views in a way that makes it clearer that we are only talking about very serious situations and that this is not It’s not something that should alarm the majority of tax advisors.

A partner at Arnold Bloch Leibler law firm, Jonathan Ortner, said the main concern was that the draft guidelines seemed very pervasive in scope and could be extended to all sorts of circumstances involving a trust.

Ms Dillon said the ATO had not clarified the wording of the draft guidelines to the desired effect, reiterating that the new provisions did not apply to a very large part of the Australian population.

“That was absolutely not our intention. Now we probably need a bigger headline to say if what you’re doing is ordinary or if it’s just standard tax advice, don’t get lost not in a territory where you seek to promote certain behaviors that are to that egregious end,” said Mrs. Dillon.

Ms Dillon said it was important for practitioners to understand that 100A did not apply to all arrangements.

“There are a lot of safeguards in 100A that take provisions that shouldn’t be in our scope and it shouldn’t be applied to absolutely everything,” she said.

“The problem we have, however, is that when you look at the return, the guarantees don’tdon’t jump on us.

Ms Dillon said the ATO should ask questions because it could not know whether the trust was within the scope of 100A.

“Most people won’t even come to our attention to be asked the questions in the first place,” she said, “but it’s very difficult for us to say in our practice guideline on compliance that certain things will absolutely not attract our attention.

“We don’t see a proliferation of 100A cases because it’s not something that hits and lands in the vast majority of situations. It’s not something we seek to apply in a tense situation and there’s no benefit to us trying to falsely apply 100A.

ATO deputy commissioner Adrian Zuccarini said a key point for practitioners was the intent of the advice.

“We’re talking about a very narrow segment of the population that’s going to be concerned about these particular products,” he said.

Mr Zuccarini said the ATO would try, where possible, to rule out a rollback.

“There are very exceptional cases to which we should return, he said.

“The key message is that we are focused on the rules and the law. We should look at the green zone because that’s where the majority of taxpayers will actually be.

“The Green Zone describes other situations that will not devote compliance resources to reviewing the application of Section 100A. I will say up front that we won’t know just by looking at the returns if an arrangement is actually in the green zone.

So you may be asked questions, but they will be light questions from what I understand from our compliance teams. They will just be there to be able to identify the particular elements of what needs to be satisfied in the green area that are actually there.

“We don’t intend to do any meaningful compliance behavior, we just want to verify that taxpayers are self-assessing correctly and are in the green zone.”

We could have done better with 100A, says ATO

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Last update: April 08, 2022

Posted: April 11, 2022

Tony Zhang

Tony Zhang

Tony Zhang is a reporter for Accountants Daily, which is the leading source for news, strategy and educational content for professionals working in the accounting industry.

Since joining the Momentum Media team in 2020, Tony has written for a range of his publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has worked full-time at Accountants Daily since September 2021.

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