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The ATO has issued for public comment a draft update TR 2023/4DC1, outlining a proposal to consolidate the meaning of “employee” for SG purposes in taxation ruling TR 2023/4. 

Taxation Ruling TR 2023/4 explains when an individual is an “employee” for pay-as-you-go withholding purposes. 

As a result of the draft update, SGR 2005/1 Superannuation guarantee: who is an employee? was withdrawn on 25 June 2024.

The draft update inserts guidance in Appendix 2 of TR 2023/4, on when a person is an employee under the expanded meaning of the term in s 12(2)-(10) of the Superannuation Guarantee (Administration) Act 1992 (SGAA).

The draft update:

-  confirms the ATO’s view in light of case law developments in the context of SGAA since the last update of SGR 2005/1 Superannuation guarantee: who is an employee?

-  consolidates the ATO’s view in respect of the common law definition of employee in the withdrawn SGR 2005/1 and TR 2023/4, and

-  provides a holistic ATO view of the common law meaning of employee and extended meaning of the word as contained in SGAA.

The proposed date of effect is retrospective and comments on the draft update can be made until 9 August 2024

The ATO has issued Addendum TR 2013/5A1, updating taxation ruling TR 2013/5 Income Tax: when a superannuation income stream commences and ceases.

Taxation Ruling TR 2013/5 has been updated to:

-  include the ATO view on when a superannuation income stream ceases and commences under a successor fund transfer,

-  reflect legislative changes, including the transfer balance cap provisions and the concept of retirement phase for superannuation interests,

-  the sunsetting on 1 April 2021 of the Income Tax Assessment Regulations 1997 (including removing the requirement for a person to make an election for a payment to be treated as a lump sum commutation in regulation 995-03), and replacement with the Income Tax Assessment (1997 Act) Regulations 2021, and

-  contains an appendix on historical legislative changes that have applied in intervening years since the original publication of the ruling in 2013.

The Addendum was issued in draft form in September 2023 and some changes have been made in response to industry feedback. 

The Treasury Laws Amendment (Support for Small business and Charities and Other Measures) Bill 2023 has passed both houses of parliament and now awaits royal asset.  It contains the following measures:

-   Temporary increase to instant asset write-off threshold – For small businesses with an aggregated annual turnover of less than $10 million:

-  The instant asset write-off threshold will increase from $1,000 to $20,000 from 1 July 2023 to 30 June 2024.  The higher threshold will apply to the cost of eligible depreciating assets, second element costs and general small business pools.

-  Extend deferral of the 5 year “lock-out” rule for the small business simplified depreciation rules to 30 June 2024.

-  Small business energy incentive – For small and medium businesses with an aggregated annual turnover of less than $50 million:

-  A 20% bonus deduction to be made available for eligible expenditure that supports electrification or more efficient energy use, incurred from 1 July 2023 until 30 June 2024.

-  The bonus deduction applies to the cost of eligible assets and improvements up to maximum amount of $100,000, with the maximum bonus deduction being $20,000.

-  Super fund non-arm’s length expense rules – The following amendments were made to the non-arm’s length income (NALI) provisions that applies to non-arm’s length expenses (NALE) incurred by SMSFs and small APRA funds

-  Limit the income of SMSFs and small APRA funds that is taxable as NALI due to a NALE which is a general expense to twice the difference between the amount actually charged and the arm’s length expense amount that would have been charged for a general expense.  Note this amendment does not apply to NALE that are specific expenses.

-  Fund income taxable as NALI will be limited to taxable income of the fund (not including assessable contributions or deductions against assessable contributions).

-  NALE that were incurred or might have been expected to be incurred before the 2018–19 income year are not taken into account when determining whether NALI arises.

Under these changes, large APRA-regulated funds and exempt public sector superannuation funds are exempt from the NALE rules for both specific and general expenses.

The amendments will apply to income derived in the 2018–19 income year or a later income year, and to expenses incurred or expected to have been incurred in the 2018–19 or later income years.

-  Expand AFCA powers to hear superannuation related complaints – The Corporations Act 2001 was amended to ensure complaints relating to superannuation that do not meet the definition of a “superannuation complaint” under the legislation may be heard by the Australian Financial Complaints Authority (AFCA).  This reverses the effect of the Full Federal Court decision in MetLife v Australian Financial Complaints Authority [2022] FCAFC 173 which led to the AFCA being unable to consider complaints about insurance policies held inside superannuation. This amendment is proposed to apply retrospectively to ensure an individual is not disadvantaged by the Metlife decision.