Introduction

These instructions will help you complete the Trust tax return 2018. They are not a guide to income tax law. You may need to refer to other publications.

When we say you or your business in these instructions, we mean either you as the trust that conducts a business, or you as the registered tax agent or trustee responsible for completing the tax return.

These instructions contain abbreviations for names or technical terms. Each term is spelt out in full the first time it is used and there is a list of abbreviations.

What’s new?

Net medical expenses tax offset

The phase out of this offset continues. For 2017–18, expenses you can claim under this offset are now restricted to disability aids, attendant care and aged care. For more information, see Question T5 in the Individual tax return instructions supplement 2018.

Exploration incentive for greenfields exploration

The Junior Minerals Exploration Incentive (JMEI) encourages shareholder investment in small exploration companies undertaking greenfields mineral exploration in Australia. The JMEI applies from the 2017–18 income year and replaces the former Exploration Development Incentive (EDI).

The scheme enables eligible exploration companies to give up a portion of their tax losses from greenfields exploration to create and issue exploration credits to some of their shareholders. Certain Australian resident investors will be entitled to a refundable tax offset for the exploration credits that they receive.

Exploration credit tax offsets are shown at items 51 and 55.

For more information, see Junior Minerals Exploration Incentive.

Increasing access to company losses

On 1 March 2019, legislation was enacted that will supplement the current ‘same business test’ for trust losses with a more flexible 'similar business test'. The new test will expand access to past year losses when a listed widely held trust enters into new transactions or business activities.

The similar business test will allow a company or listed widely held trust to access losses following a change in ownership where its business, while not the same, is similar having regard to:

• the extent to which the assets that are used in its current business to generate assessable income were also used in its former business to generate assessable income,
• the extent to which the activities and operations from which its current business is generating assessable income were also the activities and operations from which its former business generated assessable income,
• the identity of its current business and the identity of its former business, and
• the extent to which any changes to the former business resulted from the development or commercialisation of assets, products, processes, services or marketing or organisational methods of the former business.

As a test for accessing past year losses, the 'similar business test' will only be available for losses made in income years starting on or after 1 July 2015.

The 'same business test' and the 'similar business test' are collectively referred to as the 'business continuity test'.

This measure takes effect in relation to income years starting on or after 1 July 2015. For more information, go to ato.gov.au/New-legislation

See also:

LCR 2019/D1 The business continuity test - carrying on a similar business

Significant global entity (SGE)

The significant global entity (SGE) concept is used to give clarity to taxpayers about whether they are within the scope of the measures to which the definition applies.

The concept of SGE was introduced as part of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 legislation which contains a package of measures announced as part of the 2015–16 BudgetExternal Link. These measures focus on combating multinational tax avoidance.

An entity is an SGE if it is:

• a global parent entity with an annual global income of A$1 billion or more, or
• a member of a group of entities that are consolidated for accounting purposes as a single group and one of the other members of the group is a global parent entity whose annual global income is A$1 billion or more.

An SGE can be an entity in a group that only has operations in Australia, including those that are privately owned.

To assist in identifying SGEs, from 2016–17 and going forward, taxpayers are required to self-assess themselves under the definition of a SGE and notify the tax office on their annual trust tax return at 'Status of business' (item 2, G1).

The SGE concept is part of the following measures:

• The Multinational Anti-Avoidance Law (MAAL)
• Country-by-Country (CbC) Reporting
• Increased administrative penalties for SGEs.

For more information, see Significant global entities.

The Multinational Anti-Avoidance Law (MAAL)

The Multinational Anti-Avoidance Law (MAAL) is part of the government's efforts to combat tax avoidance by multinational companies operating in Australia. The MAAL has been introduced to ensure that multinationals pay their fair share of tax on the profits earned in Australia. It is aimed at SGEs that enter into artificial arrangements to avoid taxation in Australia (or elsewhere) when supplying goods or services to Australian customers.

For more information, see Combating multinational tax avoidance – a targeted anti-avoidance law.

Country-by-Country (CbC) reporting

Country-by-Country (CbC) reporting is part of a broader suite of international measures aimed at combating tax avoidance through more comprehensive information being provided to the ATO to better conduct risk assessments associated with transfer pricing.

The measure takes effect from income years commencing on, or after, 1 January 2016. It requires SGEs to supply the ATO with three statements which will provide a clear overview of its global and Australian operations. This information will be shared with tax authorities in the other jurisdictions in which the group operates. The measure also contains revised standards for transfer pricing documentation.

For more information, see Country-by-Country reporting.

International Dealings Schedule (IDS)

Entities subject to CbC reporting are generally required to lodge a local file with the tax office as a part of their obligations under the regime. An administrative arrangement is in place with respect to such entities: taxpayers may be exempt from completing labels 2 to 17 of the IDS if they lodge Part A of the local file at the same time as their income tax return.

For more information, see International Dealings Schedule 2018.

Increasing administrative penalties for SGEs

On 3 May 2016, the government announced the 'Tax integrity package – increasing administrative penalties for significant global entities' measure. This measure applies to conduct occurring from 1 July 2017.

Administrative penalties for statement will be doubled. This increases the penalties imposed on SGEs that do not take reasonable care, take a tax position that is not reasonably arguable, or fail to provide documents when required and the Commissioner determines the liability without the document.

Failure to lodge on time (FTL) penalties for SGEs will be increased. The base penalty amount will be multiplied by 500 if the entity concerned is an SGE.