General information

Australian Business Register

We are authorised by the A New Tax System (Australian Business Number) Act 1999 and other taxation laws to collect certain information relating to your entity. We may use business details supplied on the tax return to update the information held in the Australian Business Register (ABR) in relation to your entity. This may include cancelling the ABN if your entity is no longer entitled to be registered in the ABR.

Where authorised by law, selected information on the ABR may be made publicly available and some may be passed on to other Commonwealth, state, territory and local government agencies. These agencies may use ABR information for purposes authorised by their legislation, or for carrying out other functions of their agency. Examples of possible uses include registration, reporting, compliance, validation and updating of databases.

You can find details of agencies that regularly receive information from the ABR at abr.gov.auExternal Link or you can phone us on 13 92 26 between 8.00am and 6.00pm Monday to Friday to have a list of the agencies sent to you.

See our privacy statementExternal Link for more information about:

• privacy
• the information we collect
• how it may be used.

Foreign exchange (forex) gains and losses

Under the forex measures (Division 775 of the ITAA 1997) and the general translation and functional currency rules (Subdivisions 960-C and 960-D of the ITAA 1997), forex gains and losses are generally brought to account as assessable income or allowable deductions when realised. The forex measures cover both foreign currency denominated arrangements and, broadly, arrangements to be cash-settled in Australian currency with reference to a currency exchange rate. Forex gains and losses of a private or domestic nature, or in relation to exempt income or non-assessable non-exempt income, are not brought to account under the forex measures.

If a forex gain or loss is brought to account under the forex measures and under another provision of the tax law, it is assessable or deductible only under the forex measures.

Generally, where the TOFA rules apply to the forex gains and losses of a trust then those gains and losses will be brought to account under those TOFA rules instead of the forex measures.

Additionally, forex gains and losses will generally not be assessable or deductible under the forex measures if they arise from certain acquisitions or disposals of capital assets, including CGT assets and depreciating assets, and the time between the acquisition or disposal and the due date for payment is no more than 12 months. Instead, any forex gain or loss is usually matched with or integrated into the tax treatment of the underlying asset.

The general translation rule requires all tax-relevant amounts to be expressed in Australian currency regardless of whether there is an actual conversion of that foreign currency into Australian dollars.

The tax consequences of forex gains or losses on foreign currency assets, rights and obligations that were acquired or assumed before 1 July 2003 are determined under the law as it was before these measures came into effect, unless:

• you have made a transitional election that brings these arrangements under the forex measures, or
• there is an extension of an existing loan (for example, an extension by a new contract or a variation to an existing contract) that brings the arrangement within these measures.

For more information, see Foreign exchange gains and losses.

Interposed entity elections and family trust elections

The Tax Laws Amendment (2007 Measures No. 4) Act 2007 amended Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) to:

• allow interposed entity elections to be revoked where the election was made for an entity that was already included in the family group of the individual specified in the family trust election at the election commencement time. An interposed entity election may also be revoked at a later time where the entity becomes wholly owned by members of the family group. If an interposed entity election is revoked, you must complete an Interposed entity election or revocation 2019 (NAT 2788) and attach it to the trust’s tax return
• broaden the definition of family to include lineal descendants of a nephew, niece, or child of the test individual or the test individual’s spouse
• ensure that the death of a family member does not by itself result in another family member ceasing to be a member of the family
• exempt distributions made to former spouses, former widows/widowers and former stepchildren from family trust distribution tax by including them within the definition of family group
• allow family trust elections to be revoked if the family trust is a fixed trust or if the family trust election was not required for deduction of tax losses, bad debt deductions or accessing franking credits
• permit family trusts that have made a family trust election in respect of the same test individual to be included in each other’s family group and not treated as an outsider to the trust for the purposes of the income injection test
• allow the test individual specified in a family trust election to be changed only once, where the new test individual was a member of the original test individual’s family, provided that no conferrals of present entitlement to (or distributions of) income or capital of the family trust (or an interposed entity) have been made outside the new test individual’s family group.

Electronic lodgments

Tax agents who lodge trust tax returns electronically must complete the Partnerships and trusts rental property schedule 2019 if item 9 Rent is completed.

You do not have to complete that schedule if you are lodging a paper version of the trust tax return.

Information matching

We are making increasing use of information-matching technology to verify the correctness of tax returns.

Ensure all information is fully and correctly declared on your tax returns. Certain claims made may be subject to additional scrutiny by us.

In particular, we will be checking the following on the 2019 tax returns:

• distributions from partnerships and trusts
• total salary and wages paid against the pay as you go (PAYG) withholding system
• interest and dividend income
• franking credits claimed.

Hobby or business

It is important to determine whether the trust is carrying on a business, as distinct from pursuing a hobby, sport or recreational activity that does not produce assessable income.

The factors or business indicators various courts and tribunals have taken into account in determining if a business exists for tax purposes include whether the activity:

• has actually started
• has a significant commercial purpose or character
• is undertaken with a purpose of profit as well as a prospect of profit
• is carried out in a manner that is characteristic of the industry
• has repetition, regularity or continuity
• is planned, organised and carried on in a business-like manner
• is of a sufficient size, scale and permanency to generate a profit
• is not more properly described as a hobby, recreation or sporting activity.

For more information, see Are you in business? and TR 97/11 Income tax: am I carrying on a business of primary production?

Private ruling by the Commissioner of Taxation

A private ruling is a written expression of opinion by the Commissioner of Taxation (the Commissioner) about the way in which tax laws and other specified laws administered by the Commissioner would apply to, or be administered in relation to, an entity in relation to a specified scheme.

An application for a private ruling must be made in the approved form and in accordance with Divisions 357 and 359 of Schedule 1 to the Taxation Administration Act 1953 (TAA).

The required information and documentation that accompany a private ruling request must be sufficient for the Commissioner to make a private ruling and include:

• the entity to whom the ruling is to apply
• the facts describing the relevant scheme or circumstance
• relevant supporting documents such as transaction documents
• issues and questions raised relate to the relevant provision to which the ruling relates
• your arguments and references on such questions.

The Commissioner may request additional information to make a ruling. The Commissioner will then consider the request and either issue or, in certain limited circumstances, refuse to issue a private ruling.

Publication

To improve the integrity of the private rulings system, we publish a version of every private ruling on the ATO Legal database.

Before we publish, we edit the ruling to remove all identifying details, to ensure that taxpayer privacy is maintained.

A copy of the edited version of the ruling that we plan to publish is included with the ruling. Applicants who are concerned that the edited version may still allow them to be identified have 28 days to contact us to discuss these concerns.

For more information, see PS LA 2008/4 Publication of edited versions of written binding advice.

Review rights

Generally, taxpayers can object to adverse private rulings or a failure to make a private ruling in much the same way that they can object to assessments. They can refer to a review of adverse objection decisions on a private ruling by the Administrative Appeals Tribunal (AAT) or a court. An explanation of review rights and how to exercise them is issued with the private ruling.

A taxpayer cannot object to a private ruling if there is an assessment for the taxpayer for the same income year to which the ruling relates. If this is the case, the taxpayer can only object to the assessment.

Where a taxpayer has objected to a private ruling, the taxpayer cannot object to a later assessment about the same matter ruled on, unless the assessment relates to facts that are materially different from those dealt with in the private ruling, or deals with the application of tax law provisions not dealt with in the private ruling (for example, the application of Part IVA of the ITAA 1936).

For more information on how to object to private rulings and assessments, including the time limits within which those objections have to be made, see Dispute or object to an ATO decision.

When rulings are binding

A private ruling is binding on the Commissioner where it applies to an entity and the entity has relied on the ruling by acting (or omitting to act) in accordance with the private ruling. A private ruling only applies to the particular scheme or circumstance that it describes. If there is a material difference between the scheme described and what actually occurs, the private ruling does not apply.

An entity can stop relying on a private ruling at any time (unless prevented by a time limit imposed by a taxation law) by acting (or omitting to act) in a way that is not in accordance with the private ruling, and can subsequently resume relying on the private ruling by acting accordingly. The Commissioner cannot withdraw a private ruling. However, where the scheme to which a private ruling relates has not begun to be carried out and where the private ruling relates to an income year or other accounting period, and that period has not begun, the Commissioner can make a revised private ruling.