The Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 was introduced in the House of Reps, on Wed 13.2.2013. It contains the following amendments:
- of the ITAA 1936 to ensure its effective operation as the income tax general anti-avoidance provision. The Government said some recent decisions of the Full Federal Court concerning the way in which Pt IVA determines whether or not a tax advantage has been obtained in connection with an arrangement had revealed a weakness in the capacity of Pt IVA to effectively counter arrangements that, objectively viewed, have been carried out with a relevant tax avoidance purpose. The proposed amendments seek to “address this weakness and ensure that Part IVA is effective to counter tax avoidance”. The Assistant Treasurer said the amendments seek to reinforce the view that the 2 limbs of the tax benefit element of Pt IVA in s 177C(1) – ie the “would have” and “might reasonably be expected to have” limbs – are alternative tests; that there is not just one test that merely spans a spectrum of likelihood. The amendments also seek to ensure, Amendments to Part IVAin deciding whether an alternative to the scheme is reasonable, that regard is had both to the substance of the scheme and to the non-tax results or consequences for the taxpayer that the scheme achieved. In making that decision, the tax consequences of the alternative will be ignored. DATE OF EFFECT: The amendments will apply to schemes entered into, or commenced to be carried out, on or after 16 November 2012, the day on which draft legislation was released for public comment;
- amendments to “modernise Australia’s domestic transfer pricing rules”. The amendments apply to both tax treaty and non-tax treaty cases. A key feature of the new rules is their alignment with international best practice as set out by the OECD. They will also operate on a self-assessment basis. The proposed new rules would also introduce a 7-year time limit within which the Commissioner may amend a taxpayer’s assessment to give effect to a transfer pricing adjustment. Specific rules linking voluntary documentation with a reduction in administrative penalties are also included. The Bill proposes to insert Subdivs 815-B, 815-C and 815-D into the ITAA 1997 and Subdiv 284-E into Sch 1 to the Taxation Administration Act 1953. DATE OF EFFECT: The rules would apply to income years commencing on or after the earlier of: (i) 1 July 2013; and (ii) the day the Bill receives Royal Assent. In respect of withholding tax, the rules would apply in relation to income derived, or taken to be derived, in income years commencing on or after the earlier of the above 2 dates.
[LTN 29, 13/2/13]
Bill referred to Reps Economics Committee
The House of Reps Standing Committee on Economics will inquire into the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013. The Bill contains amendments concerning Pt IVA and also transfer pricing. Committee chair Julie Owens said the Committee would examine the adequacy of the Bill in achieving its policy objectives and where possible identify any unintended consequences. Interested persons and organisations are invited to make submissions to the inquiry by Friday, 22 February 2013. Details are on the Committee’s website.
[LTN 32, 18/2/13]