The Government has furthered its commitment to increasing Australia’s economic competitiveness while restoring the budget with the passage of the Tax and Superannuation Laws Amendment (2015 Measures No.1) Bill 2015 through the Parliament.
This Bill includes a number of key measures to modernise Australia’s tax system while also providing both budget repair and efficiency measures. Its passage assures key budget repair measures of more than $450 million over the forward estimates.
This sort of progress on budget repair is part of the Government’s economic plan to ensure we live within our means and are well placed to meet the challenges of the future.
In line with the Government’s election commitment, the Bill acts on recommendations of the 2009 Australia as a Financial Centre Report (referred to as the Johnson Report) to improve Australia’s economic competitiveness and provide greater tax certainty.
Among the changes, the Bill modernises the Offshore Banking Unit (OBU) regime to include certain mobile financial activities such as trading in commodities, leasing, and entering into securities lending and repurchase agreements. The integrity of the OBU regime will also be improved by excluding the trading in shares in a foreign subsidiary of an Australian bank and ensuring internal financial dealings are treated on an arm’s length basis.
Further, the Bill makes several changes to the Investment Manager Regime (IMR), which is a key measure in promoting Australia as a regional financial centre. Adopting the approach of the United Kingdom’s equivalent investment manager exemption significantly shifts the focus on promoting the use of our funds management industry in line with the Johnson Report’s recommendation. The changes will encourage greater levels of foreign investment by attracting increased foreign capital, driving economic growth and creating jobs.
The Bill also contributes to the Government’s commitment to repairing Australia’s budget by implementing several savings and efficiency measures.
The First Home Saver Account Scheme will be abolished, as it has not helped address housing affordability, attracting around 10 per cent of the savings that Labor projected.
The Bill removes the Dependent Spouse Tax Offset, as announced in last year’s Budget, with effect from 1 July 2014. This measure was first introduced in the mid-1930s and was designed for vastly different economic and social circumstances than those of modern day Australia.
The Bill assists in the development of the Global Infrastructure Hub; a key achievement of Australia’s G20 Presidency in 2014. The amendments will ensure that contributions to the Hub from a number of sources, including other governments, will not be treated as assessable income and subject to income tax. This will help the Hub to operate effectively to leverage global experience in developing infrastructure.
The Deductible Gift Recipient status of the Australian Peacekeeping Memorial Project and National Boer War Memorial Association will also be extended to help attract additional support for their activities.