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Tax Telegraph, March 2013

LegislationBills introduced: The following Bills have been introduced into the House of Representatives:

Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013

This Bill contains proposed measures which:

  • Introduce the loss carry-back provisions, which will allow corporate tax entities the choice of carrying back all or part of a tax loss from the current income year, or from the preceding income year, against an unutilised income tax liability for either of the two years before the current year. The measure applies to assessments for the 2012-13 and later income years. A transitional carry-back period of only one year applies for the 2012-13 income year

  • Correct a number of minor technical errors in the drafting of the minerals resource rent tax and petroleum resource rent tax legislation

  • Ensure that income tax is generally not payable on interest paid by the Commonwealth on unclaimed money from 1 July 2013

  • Align the special rules for calculating airline transport fringe benefits with the in-house property fringe benefits and in-house residual fringe benefits provisions

  • Allow participants the choice to make payments derived under the Sustainable Rural Water Use and Infrastructure Program tax-free, with related expenditure being non-deductible

  • Prescribe requirements for acquisitions and disposals of certain assets between self-managed superannuation funds (SMSF) and related parties.

This Bill was referred to the Parliamentary Joint Committee on Corporations and Financial Services on 14 February 2013.

Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013

This Bill proposes amendments to:

  • Part IVA: To ensure the effective operation of Part IVA by:
    • Distinguishing the ‘would have’ and ‘might reasonably be expected to have’ limbs of each of the subsection 177C(1) paragraphs so they represent alternative bases upon which the existence of a tax benefit can be demonstrated

    • Ensuring that, when obtaining a tax benefit depends on the ‘would have’ limb of one of the paragraphs in subsection 177C(1), that conclusion must be based solely on a postulate that comprises all of the events or circumstances that actually happened or existed other than those forming part of the scheme (the “annihilation approach”)

    • Ensuring that, when obtaining a tax benefit depends on the ‘might reasonably be expected to have’ limb of one of the paragraphs in subsection 177C(1), that conclusion must be based on a postulate that is a reasonable alternative to the scheme, having particular regard to the substance of the scheme and its effect for the taxpayer, but disregarding any potential tax costs (“ the reconstruction approach”); and

    • Requiring the application of Part IVA to start with a consideration of whether a person participated in the scheme for the sole or dominant purpose of securing for the taxpayer a particular tax benefit in connection with the scheme.

  • Transfer pricing: To provide that transfer pricing rules apply to both tax treaty and non-tax treaty cases to ensure greater alignment between outcomes for international arrangements involving Australia and another jurisdiction irrespective of whether the other jurisdiction forms part of Australia’s treaty network.

This Bill was referred to the House Standing Committee on Economics on 14 February 2013.

Exposure draft (ED) regulation released:

Tax certainty for deceased estates

Treasury has released an ED regulation and explanatory material to provide tax certainty to beneficiaries of deceased estates. The amendments address uncertainty caused by TR 2011/D3 as to the eligibility for a tax exemption on investment earnings derived by superannuation funds from assets supporting pensions following the death of a member. Specifically, the measure will expand the definition of ‘superannuation income stream benefit’ in the Income Tax Assessment Regulations 1997 for the purposes of the earnings tax exemption.

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