Australia: Government position on previously announced but outstanding tax changes

On 6 November 2013 the Treasurer and Assistant Treasurer issued a joint media release indicating how 92 previously announced but unlegislated tax and superannuation measures were to be dealt with.

The media release indicates that 4 further  measures had already been dealt with in proposed legislation relating to the repeal of the carbon pricing measures and the minerals resource rent tax.

It is stated that the Government will seek to resolve all policies relating to the outstanding 92 measures by 1 December 2013 for inclusion in the Mid-Year Economic and Fiscal Outlook.  It is intended that the bulk of legislation to be progressed would be passed  by 1 July 2014.

Of the 92 previously announced but unlegislated changes:

  • 18 will be proceeded with;
  • 3 will be significantly amended;
  • 7 will not be proceeded with; and
  • the remaining 64 will be subject to consultation with tax experts over the next 2 weeks with a disposition not to proceed with them.

The aim to deal with the remaining 64 measures over 2 weeks is ambitious. Among those 64 measures are some of importance where taxpayers have been waiting patiently for resolution for some time, including:

  • review of foreign source income and anti-tax deferral provisions. This relates to modernisation of the controlled foreign company rules and more targeted legislation to replace the repealed foreign investment fund rules;
  • tax treatment of earn-out arrangements. It had been proposed some time ago that look-through treatment would be adopted for capital gains tax purposes;
  • the application of GST to cross border transactions;
  • proposed "reverse charge" GST treatment of supplies of going concerns and farm-land;
  • codification of sovereign immunity exemption for dividends and interest payments to foreign governments in respect of certain investments in Australia; and
  • implementation of the Board of Taxation recommendations in relation to the tax treatment of off-market share buy-backs.

It was stated that there will be legislated protection for any taxpayer that has self-assessed their tax position in accordance with previously announced tax changes that the Government will not be proceeding with.  Taxpayers will be entitled to a refund if additional tax has been paid as a result of adherence to previous announcements that no longer proceed.

View the full list of the previously announced measures.

Some of the more important measures addressed in the media release are as follows:



Date of effect

To proceed as announced

Managed Investment Trusts

Proposed new regime for MITs to increase certainty and reduce compliance costs.  Announced in the 2009-10 and 2010-11 Budgets

1 July 2014

Dividend Washing

To prevent investors "double dipping" on franking credits.  Announced in 2013-14 Budget

1 July 2013

Restricting deduction for mining rights acquisition

To restrict deduction so that only available for genuine exploration activities.  Announced in 2013-14 Budget

1 July 2013

Consolidation regime integrity measure

To prevent the possible claiming of double deductions. Announced in 2013-14 Budget

14 May 2013

Application of capital gains tax to foreign residents

Clarifies the application of CGT over indirect Australian real property interests and issues in the administration its application to foreign residents.  Announced in 2013-14 Budget

14 May 2013 and 1 July 2016

Foreign Account Tax Compliance Act (FATCA)

Work towards the signing and enacting of an Intergovernmental Agreement (IGA) with the US.  Announced in November 2013 Media Release

Royal Assent

Managed Investments Trusts – Foreign Pension Funds

To allow foreign pension funds to access the MIT withholding tax regime.  Announced in Economic Statement 2013

1 July 2008

Investment Manager Regime

This relates to  exemption of foreign managed funds from tax on gains from the disposal of foreign non-portfolio investments and certain portfolio Australian financial arrangements. Announced in 2012-13 Budget

1 July 2011

To be significantly amended

Base erosion and debt loading measures:

  • Tightening and revision of thin capitalisation rules: This will proceed as announced
  • Changes to the exemption for foreign non-portfolio dividends: This will proceed as announced
  • Abolition of section 25-90 deduction for borrowings to finance foreign subsidiaries: This will not proceed

All announced in 2013-14 Budget

1 October 2013

Offshore banking units

To address integrity issues associated with related party dealings to exclude all related party dealings is not to proceed. Targeted integrity rules to be developed. Announced in 2013-14 Budget

1 October 2013

Not to proceed

Fringe Benefit Tax treatment of Motor Vehicle fringe benefits

Announced in Economic Statement 2013

April 2014

$2,000 cap on work-related self-educations expenses

Announced in 2013-14 Budget and Economic Statement 2013

1 July 2015

The backlog of previously announced but unlegislated tax and superannuation measures has been a continuing source of frustration for many taxpayers and their advisers.  The announcement by the Treasurer and Assistant Treasurer is welcomed in providing some additional clarity to Australia's complex tax regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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