International tax reform legislation to help make Australian companies bigger, more successful and better able to increase employment, both in Australia and overseas, was introduced into Parliament today.
The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, welcomed another key tranche of international tax reform legislation - the New International Tax Arrangements (Participation Exemption and Other Measures) Bill 2004 - covering three significant Government reforms to modernise Australia’s international tax regime.
The Bill:
- allows companies to disregard capital gains from the sale of shares in active foreign subsidiaries;
- extends the current exemption for foreign dividends and branch profits to all countries; and
- gives companies more freedom on where to locate their intra-group service companies.
These reforms focus on the offshore business operations of Australian companies, making those active business operations more attractive.
“With more than $160 billion invested in those foreign operations by Australian companies, the reforms introduced into Parliament today will improve the productive use of that capital, which is of utmost importance to the well-being of Australians,” Senator Coonan said.
“The reforms are not just relevant to big business which already have quite extensive offshore operations. Importantly, the reforms will also assist those emerging Australian businesses looking to expand offshore to take advantage of global opportunities.
“All of the tax reform measures introduced in this bill have been the subject of ongoing consultation with the business community to ensure the measures are responsive to the needs of business.”
These reforms deliver the third instalment of the Government’s package of reforms to Australia’s international taxation arrangements. It follows the enactment of the new tax treaty with the UK and proposed reform of international rules affecting superannuation funds and the funds management industry currently before Parliament.
The first of the three changes in this Bill, to allow companies to disregard capital gains from the sale of shares in active foreign subsidiaries, will apply to disposals of shares in foreign companies occurring on or after today.
The remaining two changes in the bill - to extend the current exemption for foreign dividends and branch profits to all countries and to give companies more freedom on where to locate their intra-group service companies - will apply from 1 July 2004.
The bill and the explanatory memorandum to the bill are available under 'current bills' at http://www.aph.gov.au/bills/index.htm.