The Morrison Government is introducing changes that will amend the tax legislation to stop tax avoidance, protect the integrity of Australia's tax and superannuation systems, and save businesses time and money through implementing an electronic invoicing framework.
The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill introduced into Parliament today deals with a number of activities that exploit the taxation system.
First, there will be new rules to improve the integrity of the tax treatment of concessional loans involving tax exempt entities that are privatised and subsequently become taxable.
This will impact tax exempt entities (such as a government owned entities) that are issued a loan on concessional terms and are subsequently privatised. The new rules prevent tax deductions from arising as the entity repays the loan principal, where that deduction arises from the concessional terms of the loan. This integrity measure was announced in the 2018-19 Budget and applies from 7.30pm on 8 May 2018
Secondly, the Bill will ensure that partners in partnerships cannot inappropriately access the small business capital gains tax concessions when they alienate future income from the partnership. Partners will now only be eligible for the concessions when such rights make the assignee a partner in the partnership. This integrity measure was announced in the 2018-19 Budget and applies from 7.30pm on 8 May 2018.
The Bill will also extend to family trusts, a specific anti-avoidance rule that applies to other closely held trusts that engage in circular trust distributions. This will better enable the Australian Taxation Office (ATO) to pursue family trusts that engage in these arrangements. This integrity measure will apply from 1 July 2019.
In addition, the Bill will strengthen the integrity of the tax system by denying some taxpayers a deduction for expenses associated with holding vacant land. The measure addresses concerns that some people have been improperly claiming deductions for these costs.
There are some exceptions to this measure. The amendments will not apply to expenses associated with holding vacant land if it is used by the owner or a related entity in carrying on their business, say of primary production or property development. The amendments will also not apply to corporate tax entities, managed investment trusts, public unit trusts and unit trusts. This integrity measure will apply from 1 July 2019.
The Bill will also improve the integrity of the tax system by providing the ATO with the discretion to disclose to credit reporting bureaus the tax debt information of particular businesses that are not effectively engaging with the ATO to manage their tax debts. This information can only be disclosed when certain conditions and safeguards are met, including that at least $100,000 of the debt is overdue for more than 90 days. This will reduce the unfair advantage obtained by businesses who do not pay their tax debts and will encourage businesses to engage with the ATO to manage their tax debts.
This Bill being introduced today also introduces changes to save businesses time and money through implementing an electronic invoicing framework.
The Bill provides for legislative powers and functions to be conferred to the ATO that allow it to implement an electronic invoicing (e-Invoicing) framework in Australia. Deloitte Access Economics estimates that e-Invoicing could result in economy-wide benefits of up to $28 billion over ten years.
Finally, the Bill also contains an important measure to protect workers by closing loopholes that have been used by unscrupulous employers to short-change employees who make salary sacrificed contributions to their superannuation.