On 20.0.2018, the Government introduced the Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018 was introduced in the House of Representatives. In the Schedules noted, it proposes various amendments, including the following.
- Online hotel bookings and GST [Schedule 5] – amendments would require offshore suppliers of rights or options to use commercial accommodation in Australia to include these supplies in working out their GST turnover. [See the July 2018 Tax Technical article about the Draft Legislation.] DATE OF EFFECT: These amendments would apply in relation to supplies where consideration is first received, or before consideration is received an invoice is issued, on or after 1 July 2019.
- Thin capitalisation [Schedule 4] – amends the ITAA 1997 to tighten Australia’s thin capitalisation rules [see the August 2018 Tax Technical article about the August Consultation Draft]. It does this by:
- requiring an entity to use the value of the assets, liabilities (including debt capital) and equity capital that are used in its financial statements;
- removing the ability for an entity to revalue its assets specifically for thin capitalisation purposes; and
- ensuring that non-ADI foreign controlled Australian tax consolidated groups and multiple entry consolidated groups that have foreign investments or operations are treated as both outward investing and inward investing entities.
- DATE OF EFFECT: The amendments relating to the valuation of assets, liabilities (including debt capital) and equity capital would generally apply from 7:30pm by legal time in the Australian Capital Territory, on 8 May 2018. The amendments relating to non-ADI foreign controlled Australian tax consolidated groups and multiple entry consolidated groups would apply to income years beginning on or after 1 July 2019.
- R&D Tax Incentive changes – [See the July 2018 Tax Technical article about release of the Consultation Material.]
- Schedule 1 to the Bill reforms the R&D Tax Incentive to better target the program, and improve its effectiveness, integrity and fiscal affordability.
- Schedule 2 enhances the integrity of the Incentive by ensuring R&D entities cannot obtain inappropriate tax benefits and by clawing back the benefit of the Incentive to the extent an entity has received another benefit in connection with an R&D activity.
- Schedule 3 makes information about R&D expenditure claims transparent, enhancing the guidance framework to provide certainty to applicants and streamlining administrative processes.
- DATE OF EFFECT: The amendments in Schedules 1 to 3 would generally apply to income years commencing on or after 1 July 2018. Some administrative amendments in Schedule 3 will apply from the day after Royal Assent.
- Significant global entity (SGE) definition [Schedule 7] – amends the definition of significant global entity (SGE) in the ITAA 1997 [see the July 2018 Tax Technical article about the draft legislation]. It does this so that the relevant Acts:
- apply to groups of entities headed by an entity other than a listed company in the same way as it applies to groups headed by a listed company; and
- is not affected by the exceptions to requirements applying to consolidated or materiality rules in the applicable accounting rules.
- modify the rules that identify, which entities must undertake Country by Country (CbC) reporting, to ensure these rules are aligned with Australia’s international commitments.
- DATE OF EFFECT: The amendments would apply in relation to income years or periods commencing on or after 1 July 2018. However, the amendments do not apply for the purposes of penalties in relation to entities that would not have previously been significant global entities in periods starting before 1 July 2019.
- Removing luxury car tax on re-imported cars refurbished overseas [Schedule 6] – amendments would remove liability for luxury car tax from cars that are re-imported following service, repair or refurbishment overseas. DATE OF EFFECT: The amendments would apply to importations made on or after 1 January 2019.
Comprehension questions (answers available)
- Is the commencement date, for the change in GST turnover calculation (involving on-line bookings for Australian accommodation), 1 July 2019?
- Is the commencement date, for the Thin Cap change, requiring book value only asset values, 1 July 2019?
- Is the main commencement date, for the R&D changes, 1 July 2019?
- Is the commencement date, for the SGE changes, 1 July 2019?