Monthly Archives: February 2017

*Package of measures targets multinational profit shifting structures: thin cap ratios reduced; CFCs; foreign exempt income; non-portfolio dividends; etc [3]

The Government announced that it would address profit shifting by multinationals through the disproportionate allocation of debt to Australia by tightening and improving the integrity of several aspects of Australia’s international tax arrangements, with effect for income years commencing on or after 1 July 2014. The Government expects this to have an estimated gain to revenue of…

Government updates and outlines its “tax reform roadmap” [2]

In last year’s 2012-13 Budget, the Government released details of what it called its “tax reform roadmap” which it said builds on the work already done by the Henry Review and the Government’s response, and the 2011 Tax Forum. In the 2013-14 Budget on 14 May 2013, the Government updated its tax reform road map. It reiterated…

*Consolidation: loopholes to be closed – and further Tax Board recommendations [7]

The Budget will improve the integrity of the corporate tax system by addressing a number of key issues relating to consolidated groups that were identified by the Board of Taxation in June 2012 and April 2013. In particular, the law will be amended to ensure that: Consolidated groups will no longer be able to access double deductions by shifting…

*Preventing “dividend washing” and doubling up of franking credits [6]

In the Budget, the Government announced it would close a loophole that enables sophisticated investors to engage in “dividend washing” (although known as dividend double-dipping). Currently, sophisticated investors can engage in “dividend washing” to, in effect, trade franking credits. This can result in some shareholders receiving two sets of franking credits for the same parcel…

*Foreign resident to be subject to a 10% non-final CGT withholding tax – purchaser to withhold and remit [5]

The other change will apply a 10% non-final withholding tax to the disposal by foreign residents of certain taxable Australian property. In such cases, the purchaser will be required to withhold and remit 10% of the proceeds from the sale. Although to be implemented in the context of CGT, it will apply equally where the…

*Changes to Australia’s foreign resident CGT regime – the ‘principal asset’ test in the ‘Taxable Australian Real Property’ or TARP Test [4]

This involves changes to the ”principal asset” test in Subdiv 855-A of the ITAA 1997 to ensure that indirect Australian real property interests are taxable if disposed of by a foreign resident. This change consists of 2 components. First, intercompany dealings between entities in the same tax consolidated group will not form part of the…

*Confirmation that self-education expenses to be capped at $2,000 pa [9]

The Budget Papers confirmed the Treasurer’s 13 April 2013 announcement (see April 2013 Developments) that the Government would introduce a $2,000 cap on tax deduction claims for work-related self-education expenses per person from 1 July 2014. The announcement was made “as part of a package of reforms to make a down-payment on the National Plan for School Improvement”. Taxpayers…

*Further extension of monthly PAYG instalments to big non-corporate entities [10]

The Government will extend the requirement to make monthly PAYG income tax instalments to include all large entities in the PAYG instalment system, including trusts, superannuation funds, sole traders and large investors. The Government has already announced that corporate tax entities with turnover of more than id=”mce_marker”bn will move to monthly PAYG instalments from 1 January 2014;…

*Establishment of Tax System Advisory Board [11]

The Government reiterated that it will establish a Tax System Advisory Board within the Tax Office to advise the Commissioner and the ATO Executive Committee on the strategic direction, culture, organisation, management, compliance planning, staff profile and information technology plans at the Tax Office. The cost of this measure will be met from within the…

Opposition Budget Reply: Opposition may not oppose and may keep all of Labor’s ‘savings’ – but will keep current tax thresholds and delay SGC rise [12]

The Leader of the Federal Opposition Tony Abbott gave his Budget Reply speech in the House of Reps on Thur 16.5.2013. He confirmed that a Coalition Government if elected would abolish the carbon tax and the mining tax. Mr Abbott said a Coalition Government would: keep the current income tax thresholds and the current pension…