2023 TAX UPDATES

Crypto assets to be specifically excluded as foreign currency

Crypto assets are to be specifically excluded as a foreign currency within income tax and GST legislation.

The legislation maintains the current tax treatment of crypto assets such as Bitcoin and removes uncertainty following the decision of the Government of El Salvador to adopt Bitcoin as a legal tender.

When the legislation receives royal assent, the new laws will be in effect from income years that include 1 July 2021.

Individual tax residency framework reform

The individual tax residency rules will be replaced by a new framework with a primary physical presence test.

Under the new primary test, a person who is physically present in Australia for 183 days or more in any income year will be an Australian resident for tax purposes. Individuals who do not meet the primary test will be subject to secondary tests that consider a combination of physical presence and other measurable criteria.

These new rules contrast with the current rules which look at the ordinarily resides test as the primary indicator to reviewing Australian residency.

Changes to the individual tax residency rules will be required to go through the legislative process and will commence after royal assent has been given.

Announcement(6-Sep-2022)

Consultation(6-Sep-2022)

Introduced(23-Nov-2022)

Passed

Royal Assent

Date of effect(1-Jul-2021)

Announcement(11-May-2021)

Consultation

Introduced Passed Royal Assent

Date of effect

“Temporary” apartment qualifies as permanent place of abode

In 2019 the Australian tax residency of an individual was ruled incorrect by the Full Federal Court on appeal, reversing an earlier determination by the Commissioner of Taxation. A subsequent appeal to the High Court of Australia by the Commissioner was also dismissed.

This was a major case for expatriates living abroad, as the individual in question had been living in “temporary” serviced apartments in the Middle East. During the time in question, the taxpayer’s family had been living in Australia in a property jointly owned by the individual.

The case was overturned on account of the term “permanent place of abode” which is part of the Australian tax residency question. The ATO has recently provided further guidance with TR 2022/D2 for expatriates wishing to remain a non-resident of Australia for tax purposes when working overseas.

Announced: 27-Feb-2019

Updated: 20-Jan-2023

Small business tax education courses now obligatory - Commissioner’s directive

The Commissioner of Taxation now has new powers to direct a small business taxpayer to undertake a record-keeping education course in lieu of an administrative penalty.

The new directive will be initially limited to small business owners in order to assist them in keeping up to date with tax obligations.

The individual must then provide the Commissioner with evidence of completion of the course in order to avoid financial penalty. The Commissioner will be able to issue a tax-records education direction to an entity from 12 March 2023.

Announcement(3-Aug-2022)

Consultation

Introduced(3-Aug-2022)

Passed(28-Nov-2022)

Royal Assent(12-Dec-2022)

Date of effect(12-Mar-2023)