The Tax and Superannuation Laws Amendment (2014 Measures No 4) Bill 2014 has been passed by Parliament without amendment and effectively awaits Royal Assent, after being passed by the House of Reps on Wed 24.9.2014 and then by the Senate on Thur 25.9.2014. The Bill’s main amendments are:
- Thin cap – (i) tightens the debt limit settings in the thin capitalisation rules to ensure that multinationals do not allocate a disproportionate amount of debt to their Australian operations eg reduces the maximum statutory debt limit from 3:1 to 1.5:1 (on a debt-to-equity basis) for general entities and from 20:1 to 15:1 (on a debt-to-equity basis) for non-bank financial entities; (ii) increases the de minimis threshold to $2m in interest deductions to minimise compliance costs for small businesses; and (iii) introduces a new worldwide gearing debt test for inbound investors.
- Foreign residents and capital gains– amends the ITAA 1997 to ensure that the foreign residents CGT regime operates as intended by preventing the double counting of certain assets under the Principal Asset Test. A technical correction would also be made to the meaning of “permanent establishment” in s 855-15 of the ITAA 1997.
- Foreign dividends – rewrites and reforms the existing s 23AJ exemption for foreign non-portfolio dividends into the ITAA 1997 eg the exemption will apply where an Australian corporate tax entity holds a participation interest of at least 10% in a foreign company.
- Tax receipts – would amend the tax law to provide greater transparency to taxpayers about how their tax money is spent, by requiring the Commissioner of Taxation to issue a tax receipt to individuals for the income tax assessed to them.
[LTN 186, 25/9/14]