The Government on Wed 6.11.2013, announced its formal position with respect to a large number of previously announced tax, superannuation and related changes that have not been legislated.
The Government said it is determined to resolve all policies relating to these matters by 1 December 2013 for inclusion in the Mid-Year Economic and Fiscal Outlook (MYEFO). The Government intends that the bulk of legislation that is to be progressed should be passed by the Parliament by 1 July 2014.
The Government said there will be legislated protection for any taxpayer who has self-assessed with announced changes that the Government will not proceed with.
MEASURES TO PROCEED: Of the 92 unlegislated and unresolved tax and superannuation changes the Government said it was advised about, it will proceed with 18 initiatives, including:
- Protecting the corporate tax base from erosion and loopholes:
- targeting the deduction for exploration to genuine exploration activity;
- closing loopholes in the consolidation regime;
- preventing “dividend washing”;
- improving the integrity of the foreign resident CGT regime: withholding tax regime and technical amendments.
- Tax compliance – improving compliance through third party reporting and data matching.
- Phasing out the net medical expenses tax offset.
- Superannuation reforms – transfer of lost member accounts to the ATO. Increases the threshold below which lost accounts are required to be transferred to the ATO from $2,000 to $4,000, and then to $6,000.
- Managed Investment Trust regime.
- Managed investment trust withholding tax – providing certainty for foreign pension funds. Allows pension funds to access the managed investment trust withholding tax regime (as intended).
- International tax – investment manager regime prospective arrangements (element 3). Extends the conduit income measure to exempt foreign managed funds from tax on gains from the disposal of foreign non-portfolio investments; and to exempt those funds from tax on gains from the disposal of certain portfolio Australian financial arrangements.
- Farm Management Deposit changes – The Government will increase the non-primary production income eligibility threshold for FMDs from $65,000 to id=”mce_marker”00,000.
Tobacco tax changes will proceed – indexing the tobacco excise and customs duty to Average Weekly Ordinary Time Earnings (AWOTE) instead of the CPI.
MEASURES TO BE AMENDED: A further 3 initiatives will be significantly amended, including:
- Thin cap – debt loading measures. The Coalition will not proceed with Labor’s proposal to deny deductions made under s 25-90 of the ITAA 1997. Instead, it will introduce what it says will be a targeted anti-avoidance provision.
- OBU 2013-14 Budget measure – The Government said it will not proceed with the part of this measure that excludes all related party transactions but have a targeted integrity measure to provide certainty for the industry.
MEASURES NOT TO PROCEED: The Government will not proceed with 7 initiatives eg:
- Self-education expenses cap.
- Labor’s proposed changes to the FBT regime for company cars.
- Labor’s proposal to tax superannuation pension earnings above id=”mce_marker”00,000 in funds in pension phase.
MEASURES SUBJECT TO CONSULTATION – Assistant Treasurer Arthur Sinodinos, with assistance from the Board of Taxation will undertake consultation with tax experts, including a number drawn from the Board’s advisory panel over the next 2 weeks with a disposition not to proceed with the remaining 64 measures.
Source: Joint media release by Treasurer and Assistant Treasurer, 6 November 2013
[LTN 215, 6/11/13]