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ParlInfo - Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014
no. 027 (2014-15)
legislation/billsdgs/3401799
BILLS DIGEST NO. 27, 2014-15 19 SEPTEMBER 2014
Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014 Kali Sanyal, Daniel Weight and Kai Swoboda Economics Section
Commencement .................................................................. 5
Senate Selection of Bills Committee........................................ 5
Statement of Compatibility with Human Rights ...................... 5
Schedule 1-Thin Capitalisation ............................................ 6
History of proposed changes ................................................... 7
International recognition of the thin capitalisation problem ................................................................................... 8
General approaches to thin capitalisation measures internationally ......................................................................... 9
Australia’s role in the multilateral process............................ 9
Proposed changes ............................................................... 10
Safe harbour debt limit ..................................................... 11
Worldwide gearing limit .................................................... 11
Basis of policy commitment ................................................ 12
Position of major interest groups .......................................... 12
Key issues -Thin capitalisation and main provisions ............. 14
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Schedule 2-Foreign dividends ............................................ 15
Key issues and main provisions - Foreign portfolio dividend ................................................................................. 16
Schedule 3-Improving the integrity of the foreign residents capital gains tax regime ...................................... 17
Background ............................................................................ 17
Present reform ...................................................................... 18
Policy Position of non-government parties/independents ............................................................ 18
Key Issue-Foreign residents capital gains tax regime - and main provisions .............................................................. 18
Application provisions ........................................................... 20
Financial implications ............................................................ 20
Schedule 4-Personalised tax receipts ................................. 21
Hypothecation of tax revenue to expenditure .................. 21
Exclusion of Goods and Services Tax revenue ................... 21
Categories of expenditure .................................................. 22
Schedule 5-Miscellaneous amendments ............................ 22
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AFRSA Act Aviation Fuel Revenues (Special Appropriation) Act
ETA Excise Tariff Act 1921
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The Bills Digest at a glance â¢ Schedule 1 amends the Income Tax Assessment Act 1997 (ITAA 1997) to reduce the debt limit settings in the thin capitalisation rules so that multinational companies operating in Australia do not allocate a disproportionate amount of debt to their Australian operations; increases the minimum (de minimis)
threshold to minimise compliance costs for small businesses; and introduces a new worldwide gearing debt test for inbound investments.
â¢ Schedule 2 introduces changes to the ITAA 1997 to give effect to the exemption of non-portfolio dividends.
â¢ Schedule 3 amends the ITAA 1997 to prevent double counting of certain assets under the ‘Principal Asset Test’ in order to ensure the integrity of the foreign residents capital gains tax (CGT) regime.
â¢ Schedule 4 requires the Taxation Commissioner (the Commissioner) to provide a tax receipt to individual tax payers describing how the tax money was notionally spent.
â¢ Schedule 5 makes miscellaneous amendments to the taxation and superannuation laws including style changes, repeal of redundant provisions, correction of anomalous outcomes and corrections to previous amending Acts.
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Commencement Schedules 1 and 2 to this Bill commence on the day after Royal Assent. Schedule 1 applies to income years commencing on or after 1 July 2014 and Schedule 2 applies to distribution and non-share dividends made after the day the Bill receives Royal Assent. Schedules 3 and 4 commence on Royal Assent. Schedule 3 will, depending on the relevant entity, apply to capital gains tax (CGT) events that occur after 7.30pm on 14 May 2013 or on or after 13 May 2014 (explained further at page 20). Schedule 4 will apply with respect to assessments for the 2014-15 income year and future income years. The miscellaneous amendments in Schedule 5 have various commencement and application dates—some of these amendments have retrospective effect without any adverse impact on the taxpayers.
Purpose of the Bill The purpose of the Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014 (the Bill) is to implement the following separate and unrelated measures:
â¢ to amend thin capitalisation rules so that multinationals do not allocate a disproportionate amount of debt to their Australian operations as per the reform measures announced by the Treasurer on 6 November 2013 to prevent erosion of the Australian tax base1
â¢ to change the exemption for foreign non-portfolio dividends
â¢ to change the foreign residents CGT regime
â¢ require the Commissioner of Taxation (the Commissioner) to provide a tax receipt to individual tax payers stating how their taxes are spent and
â¢ to give effect to some miscellaneous changes to the taxation and superannuation laws.
Committee consideration Senate Selection of Bills Committee On 28 August 2014, the Selection of Bills Committee recommended that the Bill not be referred to a committee.2
Senate Standing Committee for the Scrutiny of Bills On 27 August 2014 the Committee considered the Bill. The Alert Digest for the Bill records the Committee’s concerns about the possible retrospective effect of some provisions and that the Committee has sought the Minister’s advice about one such provision.3
Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.4 The Government considers that the Bill is compatible.
The Parliamentary Joint Committee on Human Rights considers that the Bill is compatible with human rights.5
Structure of the Bill The Bill is divided into five Schedules which will be dealt with individually within this Bills Digest.
1. J Hockey (Treasurer) and A Sinodinos (Assistant Treasurer), Restoring integrity in the Australian tax system, media release, 6 November 2013, accessed 28 July 2014. 2. Selection of Bills Committee, Report No. 10 of 2014, The Senate, 28 August 2014, accessed 30 August 2014. 3. Senate Standing Committee for the Scrutiny of Bills, Alert Digest No. 10 of 2014, The Senate, 27 August 2014, pp. 33-36, accessed 1 September
4. Statements of Compatibility with Human Rights for the individual Schedules can be found at pages 31, 41, 57, 63 and 82 of the Explanatory Memorandum to the Bill. 5. Parliamentary Joint Committee on Human Rights, Tenth report of the 44th Parliament, The Senate, 26 August 2014, accessed 16 September 2014.
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Schedule 1-Thin Capitalisation Background What is Thin Capitalisation?
A debt deduction is an expense an entity incurs in connection with a debt interest, such as an interest payment or a loan fee that the entity would otherwise be able to claim a deduction for in Australia. Certain expenses are excluded from being debt deductions under tax law, including rental expenses on certain leases and some foreign currency losses. A debt interest is an interest classified as debt under the debt/equity rules in Division 974 [of the Income Tax Assessment Act 1997]. Examples of debt interests include loans, bills of exchange or promissory notes.
â¢ a foreign controlled Australian entity or
â¢ an Australian entity that is a controller of a foreign entity or
â¢ a foreign entity that is carrying on a business in Australia.
The rules can apply to companies, trusts, partnerships, unincorporated bodies and individuals.7
â¢ the ‘safe harbour debt test’- an entity can broadly choose 75 per cent of the total value of assets as its debt level, as determined by the Australian accounting standards
6. Australian Taxation Office (ATO), ‘Thinly capitalised entities’, ATO website, accessed 29 July 2014. 7. ATO, ‘Entities that are affected by the rules’, ATO website, accessed 29 July 2014.
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â¢ the ‘worldwide gearing debt test’- a gearing ratio (the debt to equity ratio) determined under the Australian Accounting Standards applied to the total value of assets and
â¢ the ‘arm’s length debt test’- an entity can select a notional amount of debt capital that would have been lent by a commercial institution in respect of Australian operations, subject to some factual assumptions and relevant factors. ‘The factual assumptions include that any guarantee, credit or other form of credit support (for example, parent guarantee) is taken not to have been received. The relevant factors include the commercial practices adopted by independent parties dealing at arm’s length in the industry and the general state of the Australian economy’.8
History of proposed changes There has been a series of reforms in the thin capitalisation regime to suit the developments in the taxation environment. The Australian Government has introduced a number of changes in the relevant legislation, reflecting a process that has been ongoing for some years:
â¢ 1996: exposure legislation released for the first thin capitalisation measures by Treasurer, Peter Costello (media release)9
â¢ 2001: exposure legislation for changes to the thin capitalisation regime was released (media releases from February and May)10
â¢ a new package of changes was announced in the 2013 Budget (media releases outlining the changes and a consultation process)11
â¢ in June 2013 the Board of Taxation was asked to undertake two reviews, reporting back to the Treasurer by December 2014 and March 2015.The first review would examine the arm’s length debt test as it applies to the thin capitalisation rules to make it easier to comply with and administer, and to clarify in what circumstances the test should apply. The second review will combine a post-implementation review of the debt and equity rules with a consideration of whether there can be improved arrangements within the Australian tax system to address any inconsistencies between Australia’s and other jurisdictions’ debt and equity rules that could give rise to tax arbitrage opportunities12
â¢ in November 2013 the Treasurer and then Assistant Treasurer, Arthur Sinodinos, announced that the Government would be amending the thin capitalisation changes announced by the previous government (media release)13
â¢ in December 2013 the Board of Taxation released a discussion paper 14 on a particular aspect of thin
capitalisation rules (the arm’s length test) and
â¢ 8 May 2014: The Treasury released exposure draft legislation on thin capitalisation reforms 15 (the current Bill
is based on the same draft).
8. Minter Ellison, ‘Australia proposes changes to the thin capitalisation regime and interest deductions’, Australian Tax Brief, 11 July 2013, p. 2, accessed 13 September 2014. 9. P Costello, Income tax: thin capitalisation release of draft legislation, media release, 17 June 1997, accessed 3 September 2014. 10. P Costello, Release of exposure draft legislation: thin capitalisation and the debt/equity borderline, media release, 21 February 2001; P Costello
Thin capitalisation and debt/equity borderline: changes to exposure draft legislation, media release, 22 May 2001, accessed 3 September 2014. 11. D Bradbury and W Swan, Budget 2013: protecting the corporate tax base from erosion and loopholes, joint media release, 14 May 2013; D Bradbury, Budget 2014: protecting the corporate tax base from erosion and loopholes - measures and consultation arrangements, 14 May
2013, accessed 3 September 2014. 12. D Bradbury, Board of taxation reviews of the thin capitalisation arm's length test and Australia's debt and equity tax rules, media release, 4 June 2013, accessed 3 September 2014. 13. J Hockey and A Sinodinos, Restoring integrity in the Australian tax system, media release, 6 November 2013, accessed 13 September 2014. 14. The Board of Taxation, Review of the thin capitalisation arm’s length debt test: discussion paper, December 2013, accessed 3 September 2014. 15. Treasury, Thin capitalisation reforms: exposure draft legislation, 8 May 2014, accessed 9 September 2014.
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â¢ tightening and improving the effectiveness of the thin capitalisation rules including changing all safe harbour limits and extending a worldwide gearing test to inbound investors;
â¢ increasing the de minimis threshold from $250,000 to $2 million of debt deductions which will reduce compliance costs for small business;
â¢ better targeting the exemption for foreign non-portfolio dividends received by Australian companies; and
â¢ removing the provision allowing a tax deduction for interest expenses incurred in deriving certain exempt foreign income. 16
On 6 November 2013, the Treasurer and the Assistant Treasurer announced that the Government would be amending the thin capitalisation changes announced by the previous government, as part of an initiative to legislate some of the previous government’s announced but unlegislated measures.17 However they ruled out the introduction of provision to abolish the tax deduction for interest expenses incurred in deriving certain exempt foreign income:
The Coalition will not proceed with Labor’s proposal to deny deductions made under section 25-90 of the Income Tax Assessment Act 1997 because the revenue is essentially unrealisable and it would impose unreasonable compliance costs on Australian businesses. Australian companies have been able to claim deductions for interest and other debt-related expenses for their overseas investment, thanks to a Coalition measure in 2001, and will be able to continue to do so now that the Coalition will not proceed with this measure. We will instead introduce a targeted anti-avoidance provision after detailed consultation with stakeholders. Details of this consultation will be announced before the end of the year.
International recognition of the thin capitalisation problem The Organisation for Economic Co-operation and Development (OECD) explains the significance of the thin capitalisation rules:
Multinational groups are often able to structure their financing arrangements to maximise these benefits. Not only are they able to establish a tax-efficient mixture of debt and equity in borrowing countries, they are also able to influence the tax treatment of the lender which receives the interest - for example, the arrangements may be
16. Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2013-14, p.33, accessed 13 September 2014. 17. J Hockey and A Sinodinos, Restoring integrity in the Australian tax system, op. cit. 18. Ibid.
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structured in a way that allows the interest to be received in a jurisdiction that either does not tax the interest income, or which subjects such interest to a low tax rate. 19
The exact effect on tax revenue of increased interest payments will depend on any withholding taxes in point, and the provisions of any tax treaties in force. Countries typically tax interest on a source basis. This means that the recipient of the interest (in this case the non-resident lender) will be taxed in the country in which the interest arises (in this case the country of the borrower), i.e., the non-resident recipient of interest will be liable to tax in the country of the affiliate payer. The interest recipient’s tax liability is normally withheld by the paying affiliate, and then paid to the tax authority of the payer. Bilateral tax treaties, which allocate taxing rights between the source (payer) and residence (recipient) countries, often eliminate or significantly lower withholding tax rates applied to interest paid to a non-resident recipient.
The consultation paper released by the Treasury in May 2013 outlined one example of how different aspects of the tax and legal system could interact to create an opportunity to minimise tax.21
General approaches to thin capitalisation measures internationally Countries willing to introduce thin capitalisation rules often prescribe measures that limit, for the purposes of calculating taxable profit, the amount of debt that can give rise to deductible interest expenses. The interest on any amount of debt above that limit (excessive debt) will not be deductible for tax purposes.
1. The ‘arm’s length’ approach: Under this approach, the maximum amount of allowable debt is the amount of debt that an independent lender would be willing to lend to the company i.e. the amount of debt that a borrower could borrow from an arm’s length lender. The arm’s length approach typically considers the specific attributes of the company in determining its ‘borrowing capacity’â (that is, the amount of debt that company would be able to obtain from independent lenders).
The arm’s lengthâ approach can also encompass a determination of the amount of debt that a borrower would have borrowed if the lender had been an independent enterprise acting at arm’s length.
2. The ‘ratio’ approach: Under this approach, the maximum amount of debt on which interest may be deducted for tax purposes is established by a pre-determined ratio, such as the ratio of debt to equity. The ratio or ratios used may or may not be intended to reflect an arm’s length position. 22
Australia’s role in the multilateral process The G20 and OECD, as part of a broader focus on ‘Base Erosion and Profit Shifting’ (BEPS), are working to ensure that some methods of tax minimisation are reduced. The OECD has an ongoing work program23 and BEPS forms a part of the G20’s work.24
Globalisation and digitisation are overwhelmingly positive developments that have enabled businesses to increase their efficiency and to realise new opportunities, driving economic growth and increasing peoples’ living standards. However, globalisation and digitisation have also enabled multinational enterprises to minimise tax
19. Organisation for Economic Co-operation and Development (OECD), Thin capitalisation legislation: a background paper for country tax administrations, Initial draft, OECD, August 2012, p. 3, accessed 8 August 2014. 20. Ibid., p. 5. 21. Treasury, Addressing profit shifting through the artificial loading of debt in Australia, proposals paper, p. 5, 14 November, 2013, accessed 29
July 2014. 22. OECD, op. cit., pp. 8-9. 23. OECD, ‘Tax: base erosion and profit shifting’, OECD website, accessed 3 September 2014. 24. G20 Australia, ‘Tax’, G20 Australia website, accessed 3 September 2014.
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by artificially segregating profits from the countries in which value is created; or through exploiting differences in the tax rules of different countries in ways which result in double non-taxation.
The OECD published the Action Plan to Address Base Erosion and Profit Shifting in July 2013, a 15 point plan designed to address BEPS in a comprehensive and coordinated manner. The Action Plan is ambitious in scope with Action Items ranging from addressing the tax challenges of the digital economy, neutralising the effect of hybrid mismatch arrangements, preventing treaty abuse and the artificial avoidance of Permanent Establishment status, and ensuring that transfer pricing outcomes are in line with value creation.25
There are seven action items26 that have deliverables due for completion in September 2014 and the remaining deliverables will be completed by December 2015.
As acknowledged by the participants, restoring trust in the international system on a multilateral basis cannot be achieved by OECD countries acting alone and the G20/OECD BEPS Project has been inclusive, incorporating non-OECD G20 countries into the work of the OECD on an equal footing. The Parliamentary Secretary to the Treasurer said:
The Australian G20 Presidency has made a positive start to advancing the G20's tax agenda and by the Brisbane Leader's Summit in November, a key milestone in the two year BEPS Project, we will begin to see actions to address BEPS. 27
Proposed changes The new measures proposed in the Bill intend to incorporate the following changes:
â¢ reducing the maximum statutory debt limit (safe harbour debt limit) from 3:1 to 1.5:1 (on a debt-to-equity basis) for general entities and from 20:1 to 15:1 (on a debt-to-equity basis) for non-Authorised Deposit Taking Institutions (non- ADIs) (that is, from 75 per cent to 60 per cent on a debt to total asset basis for general entities and from 95.24 per cent to 93.75 per cent for non-bank financial institutions)
â¢ reducing the ‘outbound’ worldwide gearing ratio from 120 per cent to 100 per cent with an equivalent adjustment to the worldwide capital ratio for ADIs (banks in general)
â¢ increasing the safe harbour capital limit for ADIs (banks in general) from four per cent to six per cent of their risk weighted Australian assets
â¢ the de minimis threshold for the thin capitalisation limits will be increased from $250,000 to $2 million of debt deductions and
â¢ a new ‘inbound’ worldwide gearing debt test will be introduced. This test imports the commercial limits of the financial markets to gearing, and mirrors market outcomes for businesses that, as a whole, have naturally higher gearing levels. This will provide a further option to inward investing entities, where they do not fall within the safe harbour limit, and do not meet the arm’s length debt test. To minimise compliance costs, this
25. OECD, Action Plan on Base Erosion and Profit Shifting,2013, accessed 9 September 2014. 26. KPMG, Base erosion and profit shifting - an update, March 2014, accessed 11 August 2014. 27. S Ciobo (Parliamentary Secretary to the Treasurer), Addressing BEPS and the Government’s policy agenda, a speech delivered at the Clayton Utz - Business Council BEPS Workshop, 16 May 2014, accessed 11 August 2014.
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test will utilise the audited consolidated financial statements that are already required to be prepared by the worldwide parent entity.28
Safe harbour debt limit The new safe harbour debt limit in Australia is intended to align Australia’s regulatory regime closely with new Basel III prudential standards as espoused by the Bank for International Settlements (BIS).29 Unlike non-ADIs, the safe harbour capital test for ADIs is determined by reference to a minimum capital amount (rather than a maximum allowable debt). Debt deductions claimed by the ADIs may thus be disallowed by the ATO if the minimum capital requirement is not met.
The Bill provides that the limits for the ADIs, investing inward or outward, will be raised from four per cent to six per cent of their risk weighted Australian assets. The ‘risk weighted assets’ of the entity means that the sum of the assessed risk exposures of assets as calculated in accordance with the prudential standards determined by the prudential regulator in the jurisdiction of the foreign bank or by the Australian Prudential Regulation Authority.30
Worldwide gearing limit Usually, a gearing ratio of a firm describes a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. This ratio is a measure of financial leverage (gearing), demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds.
A company with high gearing (high leverage) is more vulnerable to downturns in the business cycle because the company must continue to service its debt regardless of how bad sales are. A greater proportion of equity provides a cushion and is seen as a measure of financial strength. 31
To access the new worldwide gearing test, it is necessary that there are eligible financial statements. Broadly, these are audited consolidated financial statements prepared under “recognised overseas accounting standards”. The ED (exposure draft) provides that if there are two or more sets of eligible financial statements, where “the entities in relation to which each set of financial statements have been prepared are not identical”, the new worldwide gearing test is not available.
28. Explanatory Memorandum, op. cit., pp. 8-9. 29. Bank for International Settlements (BIS), Basel III: a global regulatory framework for more resilient banks and banking systems, BIS, December 2010 (revised June 2011), accessed 7 August 2014. 30. Explanatory Memorandum, op. cit., p. 13. 31. Investopedia Com (Forbes Com), Definition of 'Gearing Ratio' website, accessed 9 September 2014. 32. Deloitte, Thin capitalisation and section 23AJ exposure draft, Deloitte Report, May 2014, accessed 9 September 2014.
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The assets threshold test removes access to the worldwide gearing debt test for high gearing structures, such as private equity investment schemes, where a foreign entity with high levels of related party debt (often provided by shareholders) acquires an Australian target company, being the worldwide group’s main asset. 33
â¢ the entity's worldwide equity or worldwide assets (as shown in the audited consolidated financial statements of the worldwide group) is nil or negative
â¢ audited consolidated financial statements do not exist or
â¢ the relevant entity's Australian assets represent more than 50 per cent of the consolidated group's worldwide assets.34
Basis of policy commitment These measures were announced in the Treasurer and Assistant Treasurer’s media release on 6 November 2013.35
Policy position of non-government parties/independents After the global financial crisis the Labor Government, in cooperation with the G20 and OECD forum, implemented a series of measures to ensure the integrity of the tax system so that international companies cannot unfairly take advantage of any loopholes in the taxation regime for profit shifting. The most notable among those measures are those announced in the 2013-14 Budget.36
The then Treasurer in his 2013-14 Budget speech stated that the Australian Government will be ‘closing loopholes and protecting the corporate tax base to ensure multinationals and big businesses are not being given an unfair advantage’.37
Position of major interest groups Industry bodies appear to have mixed reaction. These groups are in general cautious about the policy initiatives undertaken by the successive governments.
The Minerals Council of Australia (MCA) claimed the mining industry has already been hit with additional taxes by the Coalition Government since coming to power.38 It says that tightening Australia’s thin capitalisation regime risks the competitiveness of Australia in attracting foreign investment, particularly for capital intensive industries such as mining.39
The MCA welcomes the Government’s initiative to come to a position on the large number of previously announced but unlegislated tax measures. However, the minerals industry has concerns about a number of measures which
33. Explanatory Memorandum, p. 16. 34. PWC, Tax Talk, Parliament goes on break, 21 July 2014, accessed 9 September 2014. 35. J Hockey and A Sinodinos, Restoring integrity in the Australian tax system, op. cit. 36. Australian Government, Budget measures: budget paper no. 2: 2013-14, op. cit., pp. 33-37. 37. W Swan (Deputy Prime Minister and Treasurer), Budget speech 2013-14, op. cit. 38. B Hagemann, ‘Labor policies in Liberal Government to tax miners’, Australian Mining, 23 April 2014, accessed 8 August 2014. 39. Ibid.
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lacked consultation, have no sound policy rationale and undermine the competiveness of Australia’s tax system. These include … reducing the thin capitalisation safe harbour ratio ... 40
In its response to the 2013-14 Budget measures to introduce changes in the thin capitalisation rules, the Business Council of Australia stated that:
The changes to thin capitalisation rules run the risk of impacting on foreign investment, and potentially deterring companies from locating and investing in Australia. Piecemeal tax changes can add to perceptions of country risk when it comes to investing in Australia. 41
… BCA is pleased that the government will not proceed with the repeal of section 25-90 of the Income Tax Assessment Act 1997 under the thin capitalisation changes announced in the budget earlier this year. This would have generated significant compliance costs for many companies. 42
Any deductions that are denied as a result of the lower thin capitalisation ratios not only will have a direct additional income tax cost but will also have additional costs in that the excess interest may continue to be subject to non-resident interest withholding tax. 43
Business Valuation Resources, another professional advisory body, pointed out that some entities will benefit from these changes. ‘Although the thin capitalisation rules will translate into larger tax bills for those breaching the current limits or the proposed lower limits, planning ahead and valuing intangible assets for thin capitalisation purposes has the potential to dramatically increase safe harbour debt amounts and qualifying interest deductions’.44
While recognising that the provisions of these measures will reduce the ability for all multinational entities to debt fund Australian operations, law firm Minter Ellison pointed out that ‘the changes will particularly impact resources and infrastructure entities which generally carry a large level of debt funding. That is, the ability to attract new foreign investment and cost of such funding will be adversely affected.’45
Financial implications There is no exclusive amount estimated as revenue gain from the changes in thin capitalisation measures in the Explanatory Memorandum. However the proposed changes in thin capitalisation regime (Schedule 1) together with changes in taxation of foreign portfolio dividends (Schedule 2) are expected to provide a gain of $755 million over the forward estimates period.46 Although initially the 2013 Budget announced that ‘this measure is estimated to have a gain to revenue of $1.5 billion over the forward estimates period’,47 the present
40. Minerals Council of Australia, 2014-15 pre-budget submission, February 2014, p. 40, accessed 11 August 2014. 41. Business Council of Australia, Response to the 2013-14 Federal Budget, 14 May 2013, accessed 30 August 2014. 42. Business Council of Australia, Clearing the tax backlog a boost for business certainty, 6 November 2013, accessed 30 August 2014. 43. PricewaterhouseCoopers (PwC), ‘Tighter thin capitalisation regime to limit Australian debt deductions’, Federal Budget 2013, PwC website,
accessed 15 August 2014. 44. JH Eversgerd and J Dunne, ‘Dealing with the changes to the thin capitalisation rules’, Business Valuation Australia, 1(1), July 2014, accessed 11 August 2014. 45. Minter Ellison, ‘Australia proposes changes to the thin capitalisation regime and interest deductions’, Australian Tax Brief, 11 July 2013, p. 3,
accessed 13 September 2014. 46. Explanatory Memorandum, op. cit., p. 3. 47. Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2013-14, op.cit., p. 33.
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Bill does not include all the measures of that announcement and hence the revenue gain from such changes differs from the original estimate.
In that report, the Tax Office estimates the budget changes [2013] would hit 185 inward-investing companies with estimated total debt deductions of $3.7 billion, and 145 outward-investing companies with total debt deductions of more than $5 billion. 48
Key issues -Thin capitalisation and main provisions The Government first introduced the thin capitalisation rules in 2001 in order to accommodate commercial gearing levels across a range of industries. It has now been found that some companies enjoying the safe harbour debt limit (for general industries, non-ADIs) have been using much higher gearing level than most corporations that are independent of this arrangement. The Bill aims to better align the debt limits with commercial debt levels (for non-ADIs) and with the Basel III prudential standards (for ADIs).
Items 1, 3 and 5 of Schedule 1 amend the method statement for safe harbour debt amount for outward investors (general), inward investors (general) and inward investment vehicles in sections 820-95, 820-195 and 820-205 of the ITAA 1997 by reducing the debt limit from 3:1 to 1.5 :1 on a debt-to-equity basis.49
Items 2, 4 and 6 of Schedule 1 amend the method statement for safe harbour debt amount for outward investors (financial), inward investors (financial) and inward investment vehicles (financial) in subsections 820-100(2), 820-200(2) and section 820-210 by reducing the debt limit from 20:1 to 15:1 on a debt-to-equity basis.
As set out above, currently only outward investing entities (not foreign controlled) have the option of using the worldwide gearing debt amount to determine their maximum allowable debt. Items 9 and 19 of Schedule 1 repeal and replace subsection 820-90(2) and section 820-190 of the ITAA 1997 to extend the option to use the worldwide gearing debt amount to determine maximum allowable debt to inward investment vehicles (both financial (non-ADI) and non-financial). The provisions set the entity’s maximum allowable debt for an income year to be the greatest of the safe harbour debt amount, the arm’s length debt amount and the worldwide gearing debt amount. An inward investment vehicle (non-ADI) that is also an outward investing entity (non-ADI) may also apply the new worldwide gearing test, unless it is the head of a consolidated group or multiple-entry consolidated group50, in which case, the worldwide gearing debt test in section 820-110 for outward investing entities applies.
For a multiple entry consolidated (MEC) group, the provisional head company's consolidated financial report may not reflect the financial arrangements of the entire MEC group. A consolidated report51 prepared by an eligible tier-1 entity, which is the provisional head company, most likely would not reflect the financial arrangements of other eligible tier-1 entities or of its wholly-owned subsidiaries.52
48. N Khadem, Multinationals to lose $8.8bn in tax breaks, The Australian Financial Review, 20 March 2014, p. 13, accessed 9 August 2014. 49. Income Tax Assessment Act 1997, accessed 5 September 2014. 50. Note: Multiple Entry Consolidated Group (MEC) is a group of Australian entities that is wholly foreign-owned and does not have a common Australian resident head company. The head company of the MEC group is the company which is the provisional head company of the group at
the end of the group’s income year (ATO, Notification of formation of a multiple entry consolidated (MEC) group, website). 51. Investopedia Com (Forbes Com) defines the consolidated financial report to mean the combination of assets, liabilities and other financial items of two or more entities into one. In the context of financial accounting, the term consolidate often refers to the consolidation of financial
statements, where all subsidiaries report under the umbrella of a parent company. These statements are called consolidated financial statements. (Investopedia Com, Definition of Consolidate, website). 52. ATO, Taxation of financial arrangements, common requirements, website, accessed 9 September 2014.
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Item 14 amends the method statement in subsection 820-320(2) to make a change in the calculation of the worldwide capital amount for outward investing entities (ADIs). Currently, the worldwide capital amount allows an Australian ADI with foreign investments to fund its Australian investments with a minimum capital ratio of 80 per cent of the Tier 1 capital ratio53 of its worldwide group. Under the amended provisions, those entities will have to fund their Australian investments with a minimum capital ratio equal to 100 per cent of the Tier 1 capital ratio of the worldwide group.
Under the current law, an inward investing ADI is required to have capital equal to four per cent of its Australian risk-weighted assets. An outward investing ADI is subject to the same minimum requirement for Australian risk-weighted assets, but there is an additional capital requirement for these entities to match some other Australian assets. Items 15 to 17 of Schedule 1 change this minimum capital from four per cent to six per cent of the risk weighted Australian assets for both these entities by amending subsections 820-310(1) and 820-615(3) and section 820-405.
Schedule 1 will commence on the day after Royal Assent (clause 2 of the Bill). Item 56 provides that the amendments in Schedule 1 apply to assessments for income years starting on or after 1 July 2014. The Explanatory Memorandum notes that ‘the amendments were announced by the Government on 6 November 2013, and taxpayers will be required to apply them to assessments completed after the end of that income year. Consequently, no taxpayer will be required to calculate their tax liabilities for the 2014-15 income year until after the Bill receives Royal Assent’.54 The Senate Scrutiny of Bills Committee has left the appropriateness of the retrospective application of Schedule 1 to the consideration of the Senate as a whole.55
Schedule 2-Foreign dividends Background Section 23AJ of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a non-portfolio dividend paid to a resident company by a non-resident company is not assessable.56 In this context, a non-portfolio dividend means a dividend on a voting interest of at least ten per cent in a foreign resident company.57 The exemption does not normally apply if the resident receives the dividend in the capacity of a trustee or partner (Tax Determinations
53. Investopedia Com (Forbes Com) defines the ‘Tier 1 Capital Ratio' - A comparison between a banking firm's core equity capital and total risk-weighted assets. A firm's core equity capital is known as its Tier 1 capital and is the measure of a bank's financial strength based on the sum of its equity capital and disclosed reserves. A firm's risk-weighted assets include all assets that the firm holds that are systematically weighted for credit risk. Sourced from Investopedia website, ‘Tier 1 Capital Ratio’, accessed 10 August 2014.
54. Explanatory Memorandum, op. cit., p. 30. 55. Senate Standing Committee for the Scrutiny of Bills, Alert Digest No. 10 of 2014, op. cit., p. 34. 56. Income Tax Assessment Act 1936, accessed 16 September 2014. 57. See definition of ‘non-portfolio dividend’ at section 317 of the ITAA 1936.
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TD 2008/24 and TD 2008/25).58 However the exemption may apply where the resident is a unit trust that opts to be treated as the corporate head of a consolidated group.59
The intention of this exemption is to make non-portfolio returns on equity to Australian resident companies exempt of Australian income tax, to remove the Australian tax burden from active business income earned by a foreign subsidiary of an Australian owned company. This helps ensure that the foreign subsidiaries are able to compete on an equal footing with other businesses located in that foreign country.
The proposed amendment in the Bill followed the previous government’s 2013-14 Budget announcements that it would amend the changes in the profit shifting by multinationals by tightening and improving the integrity of several aspects of Australia’s international tax arrangements, with effect from income years commencing on or after 1 July 2014.61
The changes will also allow the exemption to apply where a distribution flows through interposed trust or partnership other than a corporate tax entity. The ability to pool portfolio dividends in an offshore entity (that is, where the interest is less than ten per cent) in order to qualify for an exemption under section 23AJ of the ITAA 1936 will be removed.62
â¢ that the rules operate as intended and are not to be available to returns on debt interests or interests that are in fact portfolio in nature and
â¢ that the rules will apply where the foreign non-portfolio dividends income is received through an investment in a trust or partnership.63
Presently, the exemption applies where the dividend is made in respect of a ‘voting interest’ in the foreign company. In consequence, some returns on debt-like interests (such as redeemable preference shares) may be eligible for the exemption. The changes will ensure that instead of voting interest the equity distribution is made in respect of equity interest in the foreign company, thus preventing the exemption from applying to returns on debt interest.64
Key issues and main provisions - Foreign portfolio dividend Item 1 of Schedule 2 repeals section 23AJ of the ITAA 1936, which is the existing exemption.
Item 4 of Schedule 2 inserts new Subdivision 768-A into the ITAA 1997, to provide a new exemption for non-portfolio foreign equity distributions in new sections 768-1, 768-5, 768-10 and 768-15 of the ITAA 1997. It allows an Australian corporate tax entity holding a participation interest equal to or above ten per cent in a foreign company, to claim non-assessable non-exempt (NANE) income, if the entity receives the distribution either directly or indirectly through one or more interposed trusts and partnerships.65 This will allow an Australian public trading trust, a corporate unit trust or a corporate limited partnership to access the exemption,
58. ATO, Taxation Determinations, TD 2008/24 and TD 2008/25, accessed 18 September 2014. 59. CCH, Australian Master Tax Guide, 2014, [21-095]. 60. Explanatory Memorandum, op. cit., p. 33. 61. Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2013-14, op. cit., p. 33. 62. Explanatory Memorandum, op. cit., p. 35. 63. CCH, Australian Master Tax Guide 2014, Special concessions - Exemption for non-portfolio dividends, [21-095]. 64. Explanatory Memorandum, op. cit., p. 35. 65. The Bill as introduced appears to contain a typographical error at proposed paragraph 768-1(a), where it refers to ‘b14cjtrusts’, rather than
‘trusts’.
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subject to satisfying certain other requirements. Currently, the exemption is only available to Australian companies.66
Section 389A of the ITAA 1936 is only to be disregarded for the purposes of applying the foreign distribution exemption in Subdivision 768-A, and not more broadly. This ensures that CFCs can continue to access the foreign distribution exemption. 67
Schedule 2 will commence on the day after Royal Assent and applies to distributions and non-share dividends made after the day the Bill receives Royal Assent (clause 2 of the Bill and item 23 of Schedule 2).
Schedule 3-Improving the integrity of the foreign residents capital gains tax regime Background Under Division 855 of the ITAA 1997 foreign residents can only make a capital gain or loss where a CGT event happens in relation to certain specified assets known as taxable Australian real property (TARP). In general, the provision applies to direct or indirect interests in Australian real property and the business assets (other than Australian real property) of an Australian permanent establishment. These rules also apply to a trustee of a foreign trust for CGT purposes.68
â¢ a direct interest in real property situated in Australia
â¢ a mining, quarrying or prospecting right to minerals, petroleum or quarry materials situated in Australia
â¢ a CGT asset that a foreign resident has used at any time in carrying on a business through a permanent establishment in Australia
â¢ an indirect interest in Australian real property - where the taxpayer and its associates hold ten per cent or more of an entity including a foreign entity, and the value of their interest is principally attributable to Australian real property and
â¢ an option or right over one of the above.69
â¢ a direct or indirect interest in Australian real property or
â¢ an asset used in carrying on business through a permanent establishment in Australia.70
66. Explanatory Memorandum, op. cit., p. 37. 67. Ibid., p. 39. 68. CCH, Australian Master Tax Guide 2014, International Tax Rules [12-720]. 69. ATO, ‘Taxable Australian property’, ATO website, accessed 14 August 2014.
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ï· the non-portfolio interest test and
ï· the principal asset test.
These tests were primarily intended to reduce compliance costs for foreign residents, while maintaining consistency with Australia's taxing rights under tax treaty practice. 71
The inclusion in the categories of TARP assets of indirect Australian real property interests was a deliberate move by the government to strengthen the application of Australia's CGT to non-portfolio interests in interposed entities (including foreign interposed entities), where more than 50 per cent of the value of interposed entities' assets are attributable, directly or indirectly, to Australian real property.
Present reform Non-resident taxpayers are taxed only on their Australian-sourced income. During the past decade, the taxation of capital gains has been subject to much change and continues to be an area focused on by successive governments in order to balance decreasing tax revenues with the desire to keep Australia an attractive place for investment.
On 14 May 2013, the previous Government announced amendments to the principal asset test in the 2013-14 Budget.73 The changes to the principal asset test would treat mining, quarrying and prospecting information and goodwill together with mining rights as real property for the purposes of the ‘principal asset test’ which is relevant in working out whether a foreign resident has an indirect TARP and thus subject to CGT on disposal of TARP.
In addition, these amendments will also ensure that transactions within a tax consolidated or multiple entry consolidated (MEC) group are ignored for the purposes of applying the principal asset test where the effect of the transaction is to create an asset (such as a debt) that is not TARP.74
Policy Position of non-government parties/independents At the time of writing this Bills Digest, the Australian Labor Party, the Australian Greens and independents had not expressed a view on the proposed CGT changes in the Bill. The Australian Labor Party, however, while in Government, introduced the changes proposed in Schedule 3 in the 2013-14 Budget.
Key Issue-Foreign residents capital gains tax regime - and main provisions There are two key issues that Schedule 3 focusses on: the permanent establishment test, and the indirect Australian real property interests and principal asset test.
70. Explanatory Memorandum, p. 43. 71. C Harding, ‘Taxation of non-residents’, The Tax Specialist, June 2014, p. 200, accessed 14 August 2014. 72. Ibid. 73. Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2013-14, op. cit., p.35. 74. PricewaterhouseCoopers (PwC), ‘Tightening the CGT treatment of indirect Australian real property interests’, Federal Budget 2014, PwC
website, accessed 15 August 2015.
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Australia currently has 44 bilateral tax treaties, known as double taxation agreements (DTAs). Their purpose is to facilitate trade and investments between Australia and each of the countries who are parties to these agreements.75 This is achieved by relieving double taxation of income which may become taxable in each country.
Under the DTAs, business profits of an enterprise of one country may be taxed in the other only if the enterprise carries on business in that other country through a permanent establishment, and only to the extent that the profits are attributable to the permanent establishment.76
The meaning of permanent establishment in section 855-15 of the ITAA 1997 relies on the definition of the term in section 23AH of the ITAA 1936, which does not apply to Australian permanent establishments.77 Under the proposed changes, for the purposes of working out whether a foreign resident has used a ‘permanent establishment’ in carrying on a business in Australia, the expression will have its meaning under any relevant tax treaty (DTA) or, if no treaty exists, the default statutory definition.78
Section 23AH, however, deals with outbound investment. The section 23AH definition applies in relation to ‘listed or unlisted countries’, which, by definition, are countries other than Australia. A strict application of this definition in the context of Division 855 precludes a CGT asset from ever being taxable Australian property. This outcome is clearly unintended as it would mean that part of the definition of taxable Australian property has no operation.79
The Principal Asset Test in section 855-30 is used to determine whether an entity’s underlying value is principally derived from Australian real property. The principal asset test requires a comparison of the sum of the market values of the entity’s TARP assets with the market value of its non-TARP assets.80
The Principal Asset Test applies to the assets of the entity in which the foreign resident had a direct interest (the test entity). Where an asset of the test entity is an interest in another entity the test may operate to also assess the assets of those other entities. That is, the principal asset test applies to the assets of other entities in which the test entity has a significant interest, directly or indirectly, provided that the foreign resident has an indirect interest of at least ten per cent in that other entity.81
The proposed changes will ensure that where the assets of two or more entities are included in the Principal Asset Test, the market value of new non-TARP assets arising from certain arrangements involving those entities will be disregarded. In particular, certain assets that relate to liabilities located elsewhere in the corporate group will not be counted because they do not represent the group’s underlying economic value.82
As set out above, in the 2013-14 Budget, the previous government announced amendments to the Principal Asset Test to:
â¢ remove the ability to use transactions between members of the same consolidated group to create and duplicate assets; and
75. Treasury, ‘Australian tax treaties’, Treasury website, accessed 17 September 2014. 76. CCH, Australian Master Tax Guide 2014 [22-150]. 77. The definition in section 23AH of the ITAA 1936 relates to ‘listed’ and ‘unlisted’ countries, which are defined at section 320 of that Act as ‘foreign countries’.
78. Explanatory Memorandum, op. cit., p. 49. 79. Ibid, p. 44. 80. Ibid., p. 44. 81. Ibid., p. 45. 82. Ibid., p. 49.
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â¢ value mining, quarrying or prospecting information and goodwill together with the mining rights to which they relate. 83
On 4 November 2013, the Government announced that it would proceed with the changes to the Principal Asset Test.84
On 3 April 2014, the Full Federal Court, in Commissioner of Taxation v Resource Capital Fund III LP gave its decision in a matter that impacts on the proposed amendments to the valuation of mining rights.85
The Government has deferred any legislative response to the decision until the effect of the decision has been analysed.86
Item 4 of Schedule 3 inserts section 855-32 which allows the market value of duplicated non-TARP assets to be disregarded so as to prevent double counting of the market value of the assets of a corporate group that are not taxable Australian real property and are created under arrangements under which corresponding liabilities are created in another member of the group. Helpful examples of how this will work in practice are provided at pages 50 to 54 of the Explanatory Memorandum to the Bill.
Application provisions Schedule 3 will commence on Royal Assent.
When the changes to the address the duplication of non-TARP assets (as set out at Part 1 of Schedule 3) were originally announced on Budget night, 14 May 2013, they were to apply only to members of the same tax consolidated group, or MEC group. Accordingly, the amendments made by Part 1 of Schedule 3 will apply to CGT events involving those entities from the time of that announcement (that is, after 7.30pm on 14 May 2013). On 13 May 2014, the Government announced that the amendments would not be restricted to consolidated groups and would also ‘now apply to interests held by foreign residents in unconsolidated groups’.87 Accordingly, the amendments in Part 1 of Schedule 3 will apply to CGT events involving non-consolidated entities from the time of that announcement (item 5 of Schedule 3).
As explained above, the technical corrections to the definition of ‘permanent establishment’ in Division 855 of the ITAA 1997, which are contained in Part 2 of Schedule 3 are intended to ensure that the definition applies as originally intended.88 Accordingly, item 10 of Schedule 3 specifies that these amendments will apply from the commencement of Division 855.
Financial implications The amendments to the Principal Asset Test are expected to raise an additional $10 million per annum from 2014-15.89
The technical correction to the meaning of ‘permanent establishment’ does not have a financial impact as it fixes a technical defect in the legislation in order to align with the existing policy intent of the regime.90
83. Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2013-14, p. 35, op. cit. 84. Explanatory Memorandum, p. 47. 85. Commissioner of Taxation v Resource Capital Fund III LP [2014] FCAFC 37, accessed 3 September 2014. 86. Explanatory Memorandum, p. 47. 87. M Cormann (Minister for Finance and Acting Assistant Treasurer), More progress in restoring integrity in the tax system, media release, 13 May
2014, accessed 17 September 2014. 88. Explanatory Memorandum, op. cit., p. 55. 89. Ibid., p. 4. 90. Ibid.
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Schedule 4-Personalised tax receipts Schedule 4 of the Bill would mainly amend the Taxation Administration Act 1953 (TAA 1953) by inserting a new Part that would require the Commissioner to provide a ‘tax receipt’ in certain circumstances.91 The tax receipt requirement would apply to assessments made in relation to the 2014-15 income year, and later income years.
In the 2014-15 Budget, the Treasurer, Joe Hockey, announced that he would introduce a tax receipt for all individual taxpayers. The Treasurer said that the receipt would improve transparency by telling taxpayers how their taxes were used.92
Item 2 of Schedule 4 would introduce a new Part 2-15 into the TAA 1953. That Part would set out the circumstances in which the Commissioner must provide a tax receipt, and the content of that receipt.
Proposed paragraph 70-5(1)(b) would require that a receipts be provided to a taxpayer that is an ‘individual’ within the meaning of the tax laws. Section 995-1 of the ITAA 1997 defines an individual to be a ‘natural person’. Proposed subparagraph 70-5(1)(c) would provide that a tax receipt is not required to be provided to an individual where the amount of tax owed by that individual in a given year is either: less than $100; or another amount determined by the Commissioner under proposed subsection 70-5(2).
Proposed subsection 70-5(3) sets out the content of the tax receipt. Proposed paragraphs 70-5(3)(a) and (b) would require the receipts to be personalised by identifying the specific individual and the amount of taxation they owe for the relevant year. Proposed paragraph 70-5(3)(c) would require the receipt to set out what categories of expenditure an individual’s tax liability has notionally financed.
Proposed paragraphs 70-5(1)(d), (e) and (f) would require the Commissioner to report the total amount of stock and securities (government debt) on issue at the end of the previous financial year, the estimated amount of government debt on issue at the end of the current financial year, and the amount of interest estimated to be paid in relation to that government debt during the current financial year. Proposed subsection 70-5(4) would require the Commissioner to use the latest information prepared in accordance with the Charter of Budget Honesty.93
Proposed subsection 70-5(5) would require the Commissioner to seek the advice of the Minister regarding what information should be included in the tax receipt.
Hypothecation of tax revenue to expenditure The phrase in proposed paragraph 70-5(3)(c)—‘notionally used to finance different categories of Commonwealth government expenditure’—recognises that it is not practical to specifically identify, or trace, which dollar of tax revenue funds which item of expenditure. One reason for this is that section 81 of the Constitution requires that all monies received by the Commonwealth be placed in the consolidated revenue fund (CRF), and that monies in the CRF may only be expended after being appropriated by the Parliament. All revenues of the Commonwealth, therefore, lose any association with their source upon being paid into the CRF.
Exclusion of Goods and Services Tax revenue Proposed paragraph 70-5(3)(c) would require the Commissioner to exclude from the tax receipt the revenue from the goods and services tax (GST). The basis for excluding the GST revenues appears to be that all those revenues are ultimately provided to the states and territories as general revenue assistance and do not contribute to areas of direct Commonwealth expenditure. This approach appears to be inconsistent with the overall budgetary treatment of the GST since the 2008-09 Budget, when the Commonwealth began recognising
91. Taxation Administration Act 1953, accessed 17 September 2014. 92. J Hockey (Treasurer), Budget 2014: a tax receipt for individuals, media release, 13 May 2014, accessed 29 August 2014. 93. Charter of Budget Honesty Act 1998, Schedule 1, accessed 29 August 2014.
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the GST as a Commonwealth tax consistent with Australian Bureau of Statistics' Government Finance Statistics94 and Australian Accounting Standards (AAS).95
â¢ public order and safety
â¢ general public services
â¢ defence
â¢ economic affairs
â¢ environmental protection
â¢ housing and community amenities
â¢ recreation, culture and religion
â¢ education and
â¢ social protection.96
Schedule 5-Miscellaneous amendments Miscellaneous amendments to the taxation and superannuation laws such as those contained in Schedule 5 are periodically made to remove anomalies, correct unintended outcomes and clarify the operation of the law.
A number of amendments in Schedule 5 relate to issues lodged on the Tax Issues Entry System (TIES), a platform for members of the community to raise issues regarding the care and maintenance of the Australian government’s tax and superannuation system.97
Concluding comments Australia's current tax integrity rules are a work in progress. In a number of areas, including thin capitalisation, controlled foreign companies (CFCs), transfer pricing and general anti-avoidance, Australia has a robust framework that has been commended by international bodies including the OECD.
94. Australian Bureau of Statistics (ABS), Australian system of government finance statistics: concepts, sources and methods, 2005, cat. no. 5514.0, ABS, Canberra, 2 September 2005, accessed 29 August 2014. 95. Australian Government, ‘Statement 5: revenue,’ Budget strategy and outlook: budget paper no. 1: 2008-09, box 5, pp. 5-26, accessed 29 August 2014. 96. ABS, op. cit. p. 148. 97. Australian Government, ‘TIES - Tax Issues Entry System’, accessed 17 September 2014.
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In a recent speech, the Parliamentary Secretary to the Treasurer claimed that, ‘As G20 President in 2014, Australia is fully supportive of the G20's commitment to a global response to BEPS [Base Erosion and Profit Shifting] based on sound tax policy principles’.98
On the domestic front, the measures in the Bill will have different impacts on companies in different sectors. The changes impacting on banks will have lesser impact, as banks have already been restructuring their capital base according to the Basel III requirements under the supervision of the Australian Prudential Regulation Authority (APRA) since January 2013.99
98. S Ciobo, Addressing BEPS and the Government’s policy agenda, op. cit. 99. Minter Ellison, op. cit.
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