Yearly Archives: 2017

*Tax Laws Amendment (2013 Measures No 1) 2013 introduced: ‘connected entity’ test and ‘stake-holder’ test strengthened; natural disaster payments exempted; DGR for ethics education [13]

The Tax Laws Amendment (2013 Measures No 1) Bill 2013 was introduced in the House of Reps on Wed 15.5.2013. It contains the following amendments: : the Bill proposes to amend the ITAA 1997: to Strengthening CGT scrip-for-scrip roll-over and other small business concessions (Schedule 1)ensure that certain integrity rules in the small business concessions and…

Executive Summary – $18bn deficit; profit shifting targeted; medical expense tax offset and Baby Bonus to go [1]

On 14 May 2013, the Treasurer handed down the 2013-14 Federal Budget, his 6th, and arguably most difficult, Budget. Significant revenue shortfalls over those budgeted for (despite growth in overall revenue collections year-on-year), and Government spending commitments such as the National Disability Insurance Scheme and the Gonski school reforms, placed considerable pressure on framing this year’s Budget.…

*Restriction on immediate deduction for mining rights and information [8]

Expenditure on mining rights and information will no longer qualify for an immediate deduction. According to the Government, this change will address situations where an immediate deduction is being claimed for the costs of acquiring an interest in natural resources that have effectively already been discovered. Mining rights and information first used for exploration will…

*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…