Commissioner’s general administrative practice
Taxation Determination TD 2011/19
This TD explains what is a “general administrative practice” applied by the Commissioner for the purpose of protecting taxpayers who have relied on such a practice from administrative penalties and interest charges.
The ATO says the term “general administrative practice” is not defined for the purposes of Sch 1 of the TAA. Accordingly, it takes its ordinary meaning, as “a practice adopted generally as a matter of administration”. Importantly, the TD emphasises that it is the practice of the Commissioner, and not taxpayers, that is relevant to establishing a general administrative practice.
The TD says a general administrative practice “consists of the habitual or customary, that is repeated, adoption of a view in multiple cases.” The ATO says whether a general administrative practice exists is a question that must be determined on a case-by-case basis, having regard to all the facts and circumstances at the relevant time.
The TD says a general administrative practice would be established where:
- a widespread practice is adopted by taxpayers
- the practice is identified and specifically considered by the ATO at a senior level or in a co-ordinated fashion (as opposed to isolated decisions being made in separate cases)
- the ATO habitually or customarily accepts the practice, such as by deciding not to contradict or challenge the practice.
Div 7A benchmark interest rate for 2011-12
Taxation Determination TD 2011/20
This TD states that for the income year that commenced on 1 July 2011, the benchmark interest rate for the purposes of ss 109N and 109E of the ITAA 1936 is 7.80 per cent (up from 7.40 per cent per annum for 2010-11).
The benchmark interest rate is relevant to private company loans made or deemed to have been made after 3 December 1997 and before 1 July 2011, and to trustee loans made after 11 December 2002 and before 1 July 2011.
The determination also states that for private companies with substituted accounting periods, TD 2001/8 applies.
GST: appropriations to government-related entities
GST Ruling GSTR 2011/2
This GST ruling deals with payments made between government-related entities that are specifically covered by an appropriation under an Australian law. Such payments fall outside the definition of “consideration” for GST purposes if they satisfy s 9-15(3)(c) of the GST Act (and so would not be subject to GST).The following requirements must be met to satisfy s 9-15(3)(c):
- there has to be an appropriation under an Australian law
- the payment must be made by a government-related entity to another government-related entity
- the payment must be specifically covered by the appropriation.
The ruling addresses each of these requirements, incorporating the Full Federal Court decision in TT-Line Company Pty Ltd v FCT (2009) 74 ATR 771. The ruling makes the following points:
- An allocation of funds to a government-related entity qualifies as a payment made to the government-related entity, ie, it is not necessary that the funds leave the relevant consolidated revenue fund.
- A payment can be covered by s 9-15(3)(c) where it is made by instalments, ie, the payment does not have to be one lump sum.
- If a payment could, under the terms of the appropriation, be payable to either a government-related entity or a non-government-related entity, s 9-15(3)(c) does not apply (ie the payment may be subject to GST).
- A government-related entity may be funded by the allocation of government money under the authority of an appropriation Act to run its operations. When the government-related entity uses the funds allocated to purchase supplies to run its operations, those further payments are not covered by s 9-15(3)(c) – unless the terms of the appropriation specify that the payments made by the entity can only be made to a government-related entity.
- The terms of the appropriation must specify that the payment be made to a government-related entity, by name or generically. These details must be stated within the terms of the appropriation and the ruling states that Budget papers, Portfolio Budget Statements and Agency Budget Statements that are tabled in Parliament with an annual appropriation Bill are examples of documents that satisfy this requirement.
Date of effect
The ruling applies both before and after its date of issue. It replaces GSTR 2006/11. However, GSTR 2006/11 will not be withdrawn until 1 July 2012.
