Category Archives: Tax Month – October 2017

BEPS Action 5 implementation sees governments rapidly dismantling harmful tax incentives worldwide: OECD

16/10/2017 – Governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes as part of the OECD/G20 BEPS standards to improve the international tax framework, according to a progress report released today. The report provides details on the outcome of peer reviews undertaken of 164 preferential tax regimes identified amongst the…

TD 2017/21 and TD 2017/22 – Foreign equity distributions to corporate partners and corporate beneficiaries for the purposes of establishing a 10% ‘participation interest’ under Subdiv 768-A

On Wed 18.10.2017, the Commissioner issued 2 Taxation Determinations on the application of the foreign equity distribution rules in Subdiv 768-A of the ITAA 1997 where the recipient is a corporate partner in a partnership or a corporate beneficiary of a trust. Under Subdiv 768-A, a foreign equity distribution is treated as NANE income if the…

TR 2017/D8 – Tax treatment of long-term construction contracts – Accruals basis or estimated profits basis (AASB 15) – IT 2450 and related determinations replaced

The Commissioner issued draft Ruling TR 2017/D8 on Wed 18.10.2017. It  explains the methods taxpayers can use to return income derived, and recognise expenses incurred, in long-term construction projects (ie those straddling 2 or more income years). The ATO describes TR 2017/D8 as a “refresh” of the former ruling on this matter, IT 2450. The Draft…

TR 2017/D7 – Lower 27.5% corporate tax rate: draft ruling on the ‘carrying on business’ requirement, which largely ignores the distinction between ‘passive investment’ and active business activities (2016-17 only – if sub-80% passive amendments pass)

On Wed 18.10.2017, the Commissioner issued draft ruling: TR 2017/D7 on whether a company is ‘carrying on a business’ for the purpose of the staged reduction of company tax rates, which is to be found in s23AA of the Income Tax Rates Act 1986. That section specifies which companies are to be taxed at the…

Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 – small turnover companies can now maintain the higher 30% tax and franking credit rate if 80% or more of their income is ‘passive income’ as defined in s23AB of the Rates Act

The Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 was introduced in the House of Reps on Wednesday 18 October 2017. This Bill is designed to substitute a ‘bright line’ test for companies that are to be taxed at the lower 27.5%, instead of the ‘carrying on business’ test that has applied since the…

GST: meaning of ‘incidental valuable metal goods’ – Minister determines when dealers can still be entitled to an Input Tax Credits for acquisitions from unregistered persons under the revised Div 66

Minister O’Dwyer made the GST determination:  A New Tax System (Goods and Services Tax) (Incidental Valuable Metal Goods) Determination 2017 (No 1) on Monday 16 Oct 2017 and it was registered on the Federal Register of Legislation on Wed 18.10.2017. The Determination specifies a class of goods that are ‘incidental valuable metal goods’ for the purposes…

Treasury Laws Amendment (2017 Measures No 6) Bill 2017 – digital currency will be treated the same as foreign currency for GST purposes from 1 July 2017

The Treasury Laws Amendment (2017 Measures No 6) Bill 2017 passed all stages of Parliament, without amendment on Thur 19.10.2017 and received Royal Assent as Act No. 118 on Monday 30.10.17. It amends the GST Act to ensure that supplies of digital currency receive equivalent GST treatment to supplies of money, particularly foreign currency (this was announced in…

Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 – refundable tax offsets or franking credits to shareholders of Junior Miners that surrendered some of the tax losses

The Government introduced the Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 on Thur 19.10.2017. It proposes to amend the tax law to replace the former Exploration Development Incentive (EDI) with the Junior Minerals Exploration Incentive (JMEI). Like the EDI, the JMEI would provide a tax incentive to invest in small minerals exploration companies undertaking greenfields minerals exploration in Australia.…

Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 – residential depreciation limits, no residential travel deductions; Foreign Acquisitions and Takeovers Bill – vacancy fees imposed on foreign owners leaving residential premises vacant for 6 months pa

The Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 was introduced with the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017, both of which passed the Lower House and then moved to the Senate on 19 October 2017. The Bills were enacted on 30 November 2017 (see related Tax Month article). The…

Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 – ‘first home buyer’ and ‘downsizer’ superannuation concessions

The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017  and the First Home Super Saver Tax Bill 2017 were passed by the House of Representatives and moved to the Senate on 18 October 2017. These Acts establish the First Home Super Saver Scheme and amend: 10 Acts to enable first home savers to make…