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Draft Taxation Ruling TR 2022/D1 - Income tax: section 100A reimbursement agreements and Draft Practical Compliance Guideline PCG 2022/D1 - section 100A reimbursement agreements – ATO compliance approach

The Taxation Committee of the Business Law Section of the Law Council of Australia (the Committee) provided the this submission on draft Taxation Ruling TR 2022/D1 - Income tax: section 100A reimbursement agreements (Draft Ruling) and draft Practical Compliance Guideline PCG 2022/D1 - section 100A reimbursement agreements – ATO compliance approach (Draft PCG, and together with the Draft Ruling, the Draft s 100A Material).

This response intends to promote the view that it is in the interests of both the Australian Taxation Office (ATO) and the community to achieve the dual goals of:

  1. assisting the Commissioner in his statutory duty to administer the tax legislation according to law and in a manner that promotes confidence in that administration; and
  2. providing taxpayers, and their advisors, with the necessary, balanced and useful guidance to understand the legislation as it is written, and how the Commissioner intends to administer it.

The Committee looks forward to continuing to work with the ATO, and other stakeholders, to pursue guidance material that achieves these two goals.

The Committee provides its observations on several specific issues which it considers warrant further consideration in relation to the Commissioner's draft views in the Draft s 100A Material, particularly the Draft Ruling. This is not intended to be a comprehensive response to the Draft s 100A Material but one rather focussed on the important specific issues raised.

As an overarching comment, the Committee note that any ruling, and any practical compliance guideline reliant on that ruling, whose contents align with the operation of Australian laws, relevant court decisions and extrinsic material are more likely to be better understood, accepted and of more assistance than ones that do not. In our view, there are instances in the Draft s 100A Material where that alignment is not apparent and thus invites opportunities for improvement. We would welcome the opportunity to assist with developing that analysis in finalising the ATO’s views in the Draft s 100A Material.

The Committee also takes this opportunity to make some observations on Taxpayer Alert TA 2022/1 – Parents benefitting from trust entitlements of their children over 18 years of age. These observations are consistent with the matters raised in relation to the Draft s 100A Material.

All legislative references are to the Income Tax Assessment Act 1936 (Cth), unless stated otherwise.

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