The Commissioner made the Taxation Administration (Remedial Power – Foreign Resident Capital Gains Withholding) Determination 2017 on 31.7.17 and it was registered on on the Federal Register of Legislative Instruments on Fri 4.8.2017.
The Determination was made under the Commissioner’s new power to ‘remedy’ legislation (change it) by legislative instrument. This power was inserted into the law in 2016 and is found in s370-5 of Sch 1 to the TAA (TAA1). The Legislative Instrument must say exactly how the law is changed. This Determination is the first (or one of the first) times the Commissioner has used his new power.
The object of this Determination is to ensure that ‘CGT withholding for non-residents’ works as intended. For sales of property, where the settlement period ‘straddles’ year end, the law did not allow vendors to use the credit (for the withheld amount remitted to the Commissioner) against the CGT, in the year in respect of which it was assessed.
The Determination remedies this by modifying the operation of s18-15, s18-20 and s18-25, of the TAA1, to ensure an entity’s credit entitlement, for amounts paid to the Commissioner under the Foreign Resident Capital Gains Withholding (FRCGW) legislation in Subdiv 14-D of the TAA1, can be used in the year in which the capital gain is assessable.
DATE OF EFFECT: The instrument applies retrospectively to align the application date of the instrument with the application date of the FRCGW legislation, being 1 July 2016.
Tax Technical covered the release of a draft of this determination (see link) and also the legislation creating the power in the Commissioner to alter the tax law, by legislative determination (see link here, here and here).
[Federal Register of Legislation – Determination; LTN 147, 4/8/17]