The Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013 was passed by the House of Reps late on Wed 29.5.2013 with 4 Government amendments concerning the loss carry-back measures and to delete the SMSF related party acquisition measures. It now moves to the Senate.
Loss carry-back – The Bill proposes the insertion of a new Div 160 into the ITAA 1997 to allow corporate tax entities to carry back their losses by establishing a refundable tax offset. As introduced, the Bill requires that an entity be a corporate tax entity throughout the year spanned by the carry-back, including throughout the year to which the loss is carried back. The Assistant Treasurer said this raises the possible interpretation that an entity cannot have been a corporate tax entity throughout the year during which it comes into being because it did not exist as an entity for the whole of that year. Under the amendments made by the Government, any part of a year before the entity came into existence is to be disregarded in deciding if it was a corporate tax entity throughout the year. This is designed to ensure that otherwise eligible entities are not precluded from carrying tax losses back to the year they came into existence and is consistent with the intention of the measure.
The Bill contains amendments concerning: loss carry-back; SMSF asset acquisitions and disposals; FBT and airline transport fringe benefits; interest on unclaimed money; Sustainable Rural Water Use and Infrastructure Program; Miscellaneous amendments.
SMSF related party acquisitions and disposals – The Government has deleted Sch 4 from the Bill which contained proposed new rules for acquisitions and disposals of certain assets between self-managed super funds (SMSFs) and related parties from 1 July 2013. No indication was given by the Government as to why the amendments were deleted, although the Coalition had indicated it would oppose the amendments and suggested there were concerns from stakeholders about practical difficulties with the proposed valuation requirements. Concerns had also been raised about extra costs that would be imposed on SMSFs because of the amendments eg in having to go on-market to acquire publicly available investments and costs with the need to obtain valuations.
The Bill as originally introduced had proposed to amend the SIS Act to prohibit a trustee of an SMSF from acquiring a “listed security” from a related party (except in a way to be prescribed by the regulations): proposed s 66A. Similar to the existing exceptions in s 66 of the SIS Act, the Bill provided that it would still be possible to acquire (or dispose of) business real property and certain in-house assets (not exceeding 5%) from a related party, provided the asset was acquired at market value as determined by a qualified independent valuer. Note that the Bill did not propose to include in s 66A the “intentional” requirement from “must not intentionally acquire an asset from a related party of the fund” in existing s 66. As such, the Bill could have resulted in a trustee of an SMSF being liable for unintended breaches where the acquisition (or disposal) is from a subsidiary company or trust in a diverse group of companies.
[LTN 103, 30/5/13]