We wrote that 2022 is the ‘Year of 100A’ after the Australian Taxation Office (ATO) released three guidance products, two in draft, on section 100A and the ATO’s appeal to the Full Federal Court from the decision of Logan J in Guardian AIT Pty Ltd ATF Australian Investment Trust v FCT [2021] FCA 1619.

A political dimension has now been added following the 7 April 2022 Media Release by the Assistant Treasurer, the Hon Michael Sukkar, on ‘Certainty and stability for family trusts’ that said the Government welcomes the ATO clarifying on 6 April 2022:

• that its draft guidance on ‘section 100A’ (draft TR 2022/D1 and draft PCG 2022/D1) will not apply on a retrospective basis;

• that taxpayers can continue to rely on the 2014 guidance for matters that arose while that guidance was in place; and

• ordinary advice services provided in exchange for an advisory fee are not subject to the promoter penalty provisions.

The Media Release also said the Government will:

• continue to monitor the section 100A consultation process closely and will consider any appropriate changes to the law should any adverse retrospective impacts arise; and

• will carefully consider the implications of the High Court in FCT v Carter [2022] HCA 10 on disclaimer of present entitlements and whether it raises any inequitable outcomes that may not have been the intention of the tax law, and whether they can be dealt with by legislative change.

The Media Release is not clear on the source of the ATO clarification on section 100A although it appears it may have been from Second Commissioner Jeremy Hirschhorn’s appearance at the Senate Economics Legislation Committee on 6 April 2022. Mr Hirschhorn said:

“… we stand by our 2014 guidance for the interim period, till now, as we bring out this new guidance.

…

… if you have only provided advice—advisory services are not subject to the promoter penalty provisions. It's really where you've been earning commissions and success fees that you're within the promoter penalties. To get into promoter penalties, you don't just have to be wrong; you have to be so wrong that your position is not reasonably arguable.

…

I think there is a fear in the tax adviser community, or some elements of the tax adviser community, that there is going to be some massive swathe of old, 100A assessments and also, potentially, a swathe of promoter penalties. That is not what we are anticipating.”

Taxpayers and their advisors will welcome the Media Release by the Assistant Treasurer. However, as we have said previously, the 2014 guidance has some generalised positions – the use of words such as “may”, “generally”, “in the absence of other factors” - that may mean that the 2014 guidance may not be a sword during an audit and may, at best, be a (poor) shield.

That said, the politicisation of the section 100A guidance process has added a new dimension. One hopes that the process is not entering the twilight zone.

What is unknown is the impact (if any) the Media Release will have on the finalised form of the ATO section 100A guidance and what the position of the Australian Labor Party is.

In the end, barring legislative reform, what may have the greatest impact on the final form of the ATO guidance, at least the Taxation Ruling, may turn out to be the result of the Guardian AIT appeal and other cases on section 100A.

Sladen Legal’s tax team regularly advises on section 100A. If you have any questions about section 100A, please contact: 

Neil Brydges
Principal Lawyer | Accredited Specialist in Tax Law
M +61 407 821 157 | T +61 3 9611 0176
E: nbrydges@sladen.com.au

Daniel Smedley
Principal | Accredited Specialist in Tax Law
M +61 411 319 327 |  T +61 3 9611 0105
E: dsmedley@sladen.com.au

Laura Spencer
Senior Associate
M 0436 436 718 | T +61 3 9611 0110
E: lspencer@sladen.com.au

Edward Hennebry
Senior Associate
T +61 3 9611 0113 | M +61 405 847 261
E: ehennebry@sladen.com.au