The Minister for Revenue and Assistant Treasurer today introduced four tax bills, with key features giving effect to a number of measures announced in the 2004-05 Budget.
The Tax Laws Amendment (2005 Measures No. 2) Bill 2005 includes changes that will:
- amend the simplified imputation system to ensure that, in certain situations, private companies that pay franked distributions in their first year of operations will not have their franking deficit tax offset reduced;
- allow a capital gains tax roll-over for superannuation funds that merge in order to comply with the licensing requirements under the superannuation safety reforms;
- enable a capital allowance deduction to be claimed for the cost of acquiring certain telecommunications rights;
- simplify the rules for changing from annual to quarterly payment of pay-as-you-go instalments in cases where taxpayers become ineligible to pay annual instalments due to GST registration or, in the case of a company, becoming a member of an instalment group;
- from today prevent entities from reducing or eliminating their GST liability on supplies of real property;
- provide appropriate tax treatment for superannuation annuities that have been split upon marriage breakdown and address minor anomalies in the existing tax law dealing with splitting of superannuation on marriage breakdown;
- remove the condition that contributions to approved worker entitlement funds must be required under an industrial instrument in order to be eligible for an exemption from fringe benefits tax.
The New International Tax Arrangements (Foreign-owned Branches and Other Measures) Bill 2005 will:
- amend the taxation treatment of dividends paid to Australian branches of non-residents by taxing them on a net basis and providing tax offsets in relation to franked dividends received;
- make changes to the controlled foreign companies rules by preventing inappropriate taxation of capital gains as a result of the definition of 'commencing day', and by removing inappropriate taxation where a controlled foreign company becomes resident of a 'listed country' due to its country of residence being listed;
- extend the existing separate entity treatment currently provided to Australian branches of foreign banks to Australian branches of foreign financial entities;
- align the taxation of shares or rights acquired under an employee share scheme more closely with international norms developed by the Organisation for Economic Co-operation and Development;
- correct an error in the application of some amendments contained in an earlier instalment of international tax reforms.
The Tax Laws Amendment (Improvements to Self Assessment) Bill (No. 1) 2005 and the Shortfall Interest Charge (Imposition) Bill 2005 will:
- amend the Taxation Administration Act 1953 to provide for a special interest regime — the shortfall interest charge — that will apply to under-assessments of income tax instead of the existing general interest charge (GIC) and at a lower rate than the GIC;
- amend the administrative penalty regime in the Taxation Administration Act 1953 by repealing the penalty for failing to follow a private ruling; requiring the Commissioner of Taxation to supply reasons why an entity is liable to a penalty and why the penalty has not been remitted in full; and making a technical clarification of what it means to have a reasonably arguable position.