In a major development, the previously announced cut to the
company tax rate will not go ahead. This was widely speculated in
the days leading up to the budget, following opposition from the
Coalition and Greens. The budget papers note that "it became
clear the Government is not able to progress a cut in the company
tax rate through Parliament" and hence decided not to proceed
with the measure.
Company loss carry-back
In the lead up to the budget the Government announced it would
introduce a loss carry back measure for companies, as recommended
by its Business Tax Working Group. The budget papers confirm that
the measure will apply from the 2012- 13 income year in relation to
taxes paid in 2011-12. It will be extended in 2013-14 and later
years so that companies can apply losses to obtain a refund of tax
paid in the two preceding years.
The carry-back will be available to companies, and entities
which are taxed like companies, including public trading trusts and
limited partnerships. If these entities make a loss in 2012-13,
they may carry this loss back, and obtain a refund for any tax paid
in the preceding year. They will only be able to carry back $1
million of losses per year, meaning that the maximum benefit will
be $300,000 (i.e. 30% of $1 million). Further any refund will be
limited to the company's franking account balance.
You will hear more about this measure from us in the coming
Thin capitalisation and research and development concessions -
Despite the introduction of the company loss carry-back, the
Government has not implemented two of the key saving measures
mentioned by its Business Tax Working Group. Many had expected
change to the thin capitalisation 'safe-harbour ratios'
or delays to the research and development tax concessions. Broadly
the thincapitalisation regime applies to limit interest deductions
for certain in-bound and out-bound investors. The continuation of
current rules will come as a pleasant surprise to international
investors, and businesses undertaking research and development
Bad debt deductions
Changes will be made to limit deductions for bad debts in
certain circumstances. Consolidated groups will no longer be able
to claim a deduction on bad debts written off, if the debtor is a
related party, but not a member of the group. This is a relatively
minor measure which we believe will have limited impact for most
Capital gains tax relief for merging superannuation funds
As previously announced, the Government will allow optional
rollover and loss relief for superannuation funds undertaking
mergers. This is intended to allow consolidation in the super
industry as part of the MySuper and Stronger Super reforms.
Consequently the relief is limited to transfers of member's
assets to a MySuper product in another complying superannuation
Technical amendments to capital gains tax provisions
A number of technical amendments to the capital gains tax
provisions have been included in the budget, a number of which were
The definition of 'beneficial interest' will be
amended so that a consistent definition applies for the
script-for-script rollover provisions and small business capital
gains tax rules.
Scrip for scrip rollover relief will be extended to investors
who hold assets as trading stock or on revenue account.
The scrip for scrip rollover integrity provisions will be
strengthened so that investors cannot defer a taxing point by
holding interests to acquire ownership rights rather than the
A number of small measures have been announced, including:
Funding of $97.7 million for an enhancement of the Australian
Business Register; and
An additional $76.8 million for Project Wickenby, the joint
taskforce responsible for the Government's fight against
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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