Revenue Measures
Education, Science and Training
VET FEE‑HELP — extension to Vocational Graduate Certificates and Diploma courses
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Department of Education, Science and Training | 0.4 | 1.3 | 2.8 | 4.5 |
The Government will extend FEE‑HELP to full‑fee paying students in Graduate Certificate and Graduate Diploma courses that are accredited as Vocational Education and Training (VET) qualifications. This will help promote student pathways to higher education.
FEE‑HELP is already available to full‑fee paying students in diploma and advanced diploma VET qualifications, where significant credit towards a university degree is guaranteed.
Amounts loaned under the Higher Education Loan Programme (HELP) are treated as financial assets and therefore do not impact on the fiscal balance. Payments by students of the indexation and loan fee components of their HELP loan are treated as interest revenue. The additional public debt interest incurred by the Government in financing the loans is separately accounted for in the Mid‑Year Economic and Fiscal Outlook.
Employment and Workplace Relations
Vocational Rehabilitation Services — recovery of costs
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Department of Employment and Workplace Relations | 1.8 | 2.5 | 3.1 | 4.0 |
| Related expense ($m) | ||||
| Department of Employment and Workplace Relations | 1.0 | 0.7 | 0.7 | 0.7 |
| Related capital ($m) | ||||
| Department of Employment and Workplace Relations | 0.2 | - | - | - |
The Government will provide $3.4 million over four years to put in place new arrangements to manage repayments from clients who have received government‑funded vocational rehabilitation services pending finalisation of their compensation actions. This measure is expected to lead to revenue of $11.3 million over four years.
Recent changes that have broadened the range of vocational rehabilitation providers required revised arrangements to recover the costs of rehabilitation from those who are successful in obtaining a settlement or compensation payment for the disability requiring the rehabilitation.
This measure includes $0.2 million in capital funding in 2007‑08 for computer system enhancements.
Industry, Tourism and Resources
Reform of the Tradex Scheme and termination of the Manufacturing in Bond Scheme
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Department of Industry, Tourism and Resources | .. | .. | .. | .. |
The Government will make changes to its up‑front Customs duty exemption programmes to:
- decouple the Tradex Scheme from the customs duty drawback regulations;
- improve the administration of the Tradex Scheme; and
- terminate the Manufacturing in Bond (MiB) scheme.
The changes to the Tradex Scheme will have effect from the date of proclamation of the enabling legislation (or six months after the date of Royal Assent of the enabling legislation). MiB will be terminated from the date of registration of the amending regulation.
Treasury
Australian Taxation Office — enhanced compliance activity
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | 300.0 | 605.0 | 1,045.0 |
| Related expense ($m) | ||||
| Australian Taxation Office | - | 73.3 | 122.3 | 117.7 |
| Related capital ($m) | ||||
| Australian Taxation Office | - | 8.6 | - | - |
The Government will provide $446 million over four years from 2008‑09 to the Australian Taxation Office (ATO) to allow it to deploy additional staff and enhance compliance activities across all segments of the taxation system. This increased investment in ATO activities is expected to increase revenue by $3.7 billion over four years (including $1.8 billion in 2011‑12).
The increased resources will allow the ATO to provide taxpayers with better and more targeted help and education products to assist with more accurate self assessment, allow a greater focus on prevention of non‑compliance by early detection and advice on obligations, improve intelligence and early risk detection (including through data mining and strategic risk research) and allow for increased and more targeted enforcement activity.
Capital gains tax — changes to roll‑over arrangements for replacement of statutory licences
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | * | * | * | * |
The Government has provided a partial capital gains tax (CGT) roll‑over where one or more statutory licences end and the licensee receives non‑licence capital proceeds, such as money, in addition to the replacement licence(s). This measure applies to CGT events that occur in the 2006‑07 income year or later income years.
The impact of this measure was reported in the 2007‑08 Budget as a decision taken but not yet announced with an impact of $20 million in 2006‑07 and $90 million in 2007‑08.
The Government has also extended the existing statutory licence CGT roll‑over so that it applies where one or more statutory licences end and the licensee is issued one or more new licences that authorise substantially similar activity to the original statutory licence(s). The Government has also made minor changes to the partial statutory licence CGT roll‑over so that it applies more effectively.
These changes increase the flexibility of the existing roll‑over and ensure that CGT need not be an impediment to adjustment programmes where part of the entitlement of a statutory licence is removed.
Further information can be found in the press release of 8 June 2007 issued by the Minister for Revenue and Assistant Treasurer.
Capital gains tax — further improvements to the superannuation fund roll‑over on marriage breakdown
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | .. | .. | .. | .. |
The Government has clarified and improved the capital gains tax (CGT) marriage breakdown roll‑over for small superannuation funds, with effect from 1 July 2007.
This measure enables one spouse, including a de facto spouse, to transfer their personal superannuation interest to another complying superannuation fund regardless of whether there has been a payment split. This change enhances the CGT roll‑over on marriage breakdown for small superannuation funds announced in the 2007‑08 Budget. It extends the availability of the roll‑over and further facilitates the complete separation of superannuation assets for spouses following a marriage breakdown.
Carbon sink forests — establishment costs deductible
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | 1.3 | -0.6 | -1.4 |
The Government will make a number of changes to the arrangements allowing taxpayers to claim a tax deduction for the cost of establishing trees in a carbon sink forest, with effect from 1 July 2007.
These changes include:
- removing the requirement that taxpayers must be a member of the Australian Government's Greenhouse Challenge programme;
- bringing forward the time when a deduction can be claimed; and
- allowing the costs of regenerating a forest as establishment costs.
This measure builds on the 2007‑08 Budget measure Carbon sink forests — establishment costs deductible.
Further information can be found in the Treasurer's press release of 13 September 2007.
Changes to the extension of the premium 175 per cent research and development tax concession to subsidiaries of multinational enterprises
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | .. | .. | .. | .. |
The Government has removed the requirement for companies to have a three‑year history of research and development (R&D) expenditure in order to claim the 175 per cent premium R&D tax concession in certain circumstances, with effect from 1 July 2007.
This builds on the measure announced in the 2007‑08 Budget which allowed Australian subsidiaries of multinational enterprises to claim deductions under the 175 per cent premium R&D tax concession.
As a transitional arrangement, eligibility for the extended 175 per cent premium R&D tax concession for companies with a presence in Australia will be determined by reference to a deemed three‑year history based on expenditure in the 2007‑08 year. Under the ongoing arrangements, companies establishing a presence in Australia for the first time will be given immediate access to the concession.
The Government has also decided to allow multinational enterprises to claim this concession where the parent company is based in Australia.
Consolidation — modification to the tax cost setting rules
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | * | * | * | * |
The Government will not allow an uplift in the costs of assets for tax purposes for an entity that joins a consolidated group following a capital gains tax (CGT) roll‑over affecting the membership interests of the joining entity, with effect from 13 October 2007.
When an entity joins a consolidated group, the cost setting rules apply to reset the tax cost of the entity's assets. This ensures that the costs of the entity's assets reflect the cost to the group of acquiring the entity. This measure will prevent a significant deferral of tax by ensuring that the cost setting rules do not apply to uplift the costs of a joining entity's assets following a scrip‑for‑scrip roll‑over, or another CGT roll‑over affecting the membership interests of the joining entity.
Further information can be found in the press release of 12 October 2007 issued by the Minister for Revenue and Assistant Treasurer.
Effective life depreciation of buildings and structures
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | 15.0 | 40.0 | 70.0 |
The Government has decided that it will not proceed with bringing the write‑off for capital expenditure on buildings and structures into the Uniform Capital Allowance regime.
The Government previously indicated that it accepted in principle a recommendation of the Review of Business Taxation that new buildings and structures should be included in the Uniform Capital Allowance regime.
The income tax law currently provides a separate write‑off regime for buildings and structures where taxpayers can claim an annual 2.5 per cent or 4.0 per cent deduction for the value of construction of their buildings and structural improvements (not land) where the property is used for income producing purposes.
Implementing the recommendation would raise a number of complex issues, including separating land value from that of buildings and structures, and defining the asset unit. Furthermore, implementing the recommendation may create uncertainty in the housing sector.
Farm Management Deposits — early withdrawal
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | - | - | - |
The Government will align the early withdrawal requirements for the Farm Management Deposits scheme with the exceptional circumstances guidelines, with effect from 1 July 2002.
Generally, a farm management deposit must be held for 12 months in order to retain the tax deduction. Early withdrawal of a farm management deposit is allowed for primary producers who conduct their primary production business wholly or partly in exceptional circumstance areas and the deposit was made prior to the exceptional circumstance declaration.
The measure will remove an inconsistency where an eligible primary producer is denied the tax benefits as a consequence of withdrawing their farm management deposit early when they are in an area that has previously been declared in exceptional circumstances, even though the exceptional circumstances declaration did not apply to them because of their producer class.
Fringe benefits tax — depreciation rate for cars
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | 4.0 | 8.0 | 9.0 |
The Government has changed the formula for calculating the fringe benefits tax (FBT) depreciation rate for cars, with effect from the 2008‑09 FBT year.
This measure updates the formula for cars acquired on or after 10 May 2006 to reflect the increase in the diminishing value rate for determining depreciation deductions under the operating cost method of calculating the FBT for cars. The change increases the diminishing value rate used in the calculation from 150 per cent to 200 per cent, to align it with the diminishing value rate under the Uniform Capital Allowance regime announced in the 2006‑07 Budget.
Interest withholding tax — clarification of exemption
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | - | - | - |
The Government has more closely specified which debt interests are eligible for exemption from interest withholding tax (IWT), with effect from 7 December 2006.
This measure confirms that the exemption applies to non‑debenture debt interests that are non‑equity shares, syndicated loans and other financial instruments prescribed by regulation.
This measure corrects an unintentional widening of the scope of the IWT exemption which resulted from IWT amendments in 2005. This restores the Government's original policy intent.
Further information can be found in the press release of 7 December 2006 issued by the Minister for Revenue and Assistant Treasurer.
New international taxation arrangements — new foreign income tax offset rules
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | - | -15.0 | -15.0 |
The Government has enacted new foreign income tax offset rules to alleviate international double taxation, with effect to income years beginning on or after 1 July 2008.
The new foreign income tax offset rules provide an offset for foreign income tax paid by taxpayers on their assessable income up to the Australian tax payable on that income. These rules build on the 2005‑06 Budget measure abolishing foreign loss and foreign tax credit quarantining, and streamlining the remaining foreign tax credit rules. The additional cost of this measure is largely owing to the new foreign tax offset cap (which includes a $1,000 threshold for taxpayers with small offset claims) and the transitional rules (for the treatment of existing quarantined foreign losses and credits) developed in consultation with the business community.
These rules will reduce compliance costs for taxpayers that conduct foreign business or earn foreign income.
Personal income tax — tax exemption for scholarships under the Endeavour Awards
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | -0.8 | -1.3 | -1.4 | -1.4 |
The Government has exempted the Endeavour Research Fellowships and the Endeavour Executive Awards from income tax, with effect from 1 July 2007.
Personal income tax — tax exemption for the Prime Minister's Prize for Australian History and the Prime Minister's Prize for Science
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | .. | .. | .. | .. |
The Government has exempted the Prime Minister's Prize for Australian History and the Prime Minister's Prize for Science from income tax to the extent that the prizes would otherwise be assessable income, with effect from 1 July 2006.
Personal income tax — tax exemption of crisis, bereavement and related payments under the ABSTUDY scheme
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | - | - | - |
The Government will allow crisis and bereavement payments under the ABSTUDY scheme to be exempt from income tax, in line with the tax treatment of similar payments under the Social Security Act 1991, with effect from 1 January 2008.
The extension of crisis and bereavement payments to ABSTUDY recipients was announced in the 2007‑08 Budget.
Personal income tax cuts
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | -7,110.0 | -10,940.0 | -15,930.0 |
The Government will reduce taxes by $34 billion over the forward estimates period, with effect from 1 July 2008.
The 30 per cent threshold will increase from $30,001 to $34,001 from 1 July 2008. In addition, from 1 July 2009 the 30 per cent threshold will increase to $35,001. The 40 per cent and 45 per cent tax rates will be reduced to 38 per cent and 43 per cent. From 1 July 2010, the 30 per cent threshold will increase to $37,001 and the top marginal tax rates will be cut to 37 per cent and 42 per cent.
The tax cuts will enhance incentives to work, invest and save and provide a significant reduction in taxes for all Australians. They continue the focus on encouraging workforce participation that has been a feature of this Government's tax reform and will further enhance Australia's international competitiveness.
Low income tax offset
From 1 July 2008, the LITO will increase from $750 to $1,200. It will continue to be withdrawn from the income level of $30,000. Those eligible for the full LITO will have an effective tax free threshold of $14,000 (up from the current level of $11,000). Further increases in the LITO, to $1,350 from 1 July 2009 and to $1,500 from 1 July 2010, will mean that the effective tax free threshold will increase further to $15,000 in 2009‑10 and $16,000 in 2010‑11.
Given the large increase in the amount of the offset, new withholding schedules will be created so that low and average income earners will receive half of the benefits of the LITO through their regular pay, rather than receiving the total as a lump sum when their income tax returns are assessed. This will allow people to realise sooner the benefits of working more.
Senior Australians
Senior Australians eligible for the senior Australians tax offset and the LITO currently do not pay tax until they reach an annual income of $25,867 for singles and $21,680 for each member of a couple. From 1 July 2008, these income levels will be lifted to $28,867 for singles and $24,680 for each member of a couple. From 1 July 2009, these incomes levels will be lifted to $29,867 for singles and $25,680 for each member of a couple. By 2010‑11, the income levels will be $30,685 for singles and $26,680 for each member of a couple.
The Medicare levy threshold that applies to senior Australians will be increased to ensure that senior Australians do not pay the Medicare levy until they begin to incur an income tax liability.
Fringe benefits tax
The fringe benefits tax rate will also be reduced in line with the reductions in the top marginal tax rate (including the Medicare levy), decreasing to 44.5 per cent from 1 April 2009 and to 43.5 per cent from 1 April 2010.
Philanthropy — changes to prescribed private funds
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | -196.6 | -35.5 | -34.7 | -36.1 |
Since the 2007‑08 Budget, 146 funds have been approved for prescription as prescribed private funds (PPFs), and two funds have been declared no longer to be PPFs.
PPFs allow businesses, families and individuals to establish and donate to a philanthropic trust of their own, for the purposes of disbursing funds to a range of deductible gift recipients.
Philanthropy — updating the list of deductible gift recipients
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | -0.5 | -13.0 | -11.2 | -9.8 |
Since the 2007‑08 Budget, the Government has announced that qualifying gifts of $2 or more to the following organisations have been made tax deductible:
- Amy Gillett Foundation;
- The Council for Jewish Community Security;
- All state and territory bodies of Kidsafe;
- Social Ventures Australia Limited;
- Spirit of Australia Foundation;
- The Bathurst War Memorial Carillon Public Fund Trust, granting gift deductibility status until 2 August 2009;
- Memorial(s) Development Committee Limited, granting gift deductibility status until 30 June 2010;
- World Youth Day 2008 Trust, granting gift deductibility status until 30 June 2009;
- Wheelchairs For Kids Inc, granting gift deductibility status for a period of two years;
- Australia for UNHCR, extending gift deductibility status until 27 June 2012;
- Shrine of Remembrance Restoration and Development Trust, extending gift deductibility status until 30 June 2009; and
- Xanana Vocational Education Trust, extending gift deductibility status until 20 July 2009.
In addition, since the 2007‑08 Budget there have been:
- 18 admissions to, and one removal from, the Register of Environmental Organisations;
- 24 admissions to, and 7 removals from, the Register of Cultural Organisations;
- 3 admissions to the Register of Harm Prevention Charitable Institutions; and
- 1 admission to the Overseas Aid Gift Deduction Scheme.
The Register of Environmental Organisations can be found on the Department of the Environment and Water Resources website at www.environment.gov.au. The Register for Cultural Organisations can be found on the Department of Communications, Information Technology and the Arts website at www.dcita.gov.au. The Register of Harm Prevention Charitable Institutions can be found on the Department of Families, Community Services and Indigenous Affairs website at www.facsia.gov.au. The list of overseas aid relief funds can be found on the AusAid website at www.ausaid.gov.au.
Superannuation — additional exempt public sector superannuation scheme
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | .. | .. | .. | .. |
The Government has allowed former members of the Australian Capital Territory (ACT) judiciary, aged 60 and over who are recipients of superannuation income streams paid in accordance with the Supreme Court Act 1933 (ACT), to access the 10 per cent tax offset introduced under Better Super. This measure had effect from 29 September 2007.
Superannuation — amendments to the definition of segregated current pension assets
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | 4.0 | 5.0 | 5.0 | 6.0 |
The Government has clarified that for account‑based pensions, only assets included in the income stream account balance are eligible for the tax concessions available to segregated current pension assets, with effect from 1 July 2007.
Income derived from the assets supporting a pension is exempt from tax. In return for this concessional tax treatment, pensions are subject to rules designed to ensure that the capital in the pension is drawn down over time. In the case of account‑based pensions the rules require that a payment of at least a minimum proportion of the pension account balance be made each year.
This measure ensures that the payment rules for account‑based pensions operate in a manner consistent with the Government's policy intent.
Superannuation — changes to the definition of a superannuation interest
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | -12.0 | -12.0 | -12.0 | -12.0 |
The Government has amended the definition of a superannuation interest so that every amount, benefit or entitlement of a member within a single superannuation fund (other than a self‑managed superannuation fund) is no longer explicitly aggregated to form a single interest, with effect from 1 July 2007.
Previously, all amounts, benefits or entitlements held by a superannuation provider on behalf of a member comprised one superannuation interest for the purposes of determining the tax free and taxable components.
This measure removes the need for large superannuation providers to identify all member accounts within a fund and aggregate these accounts for taxation purposes. This will provide flexibility in circumstances where it would have been difficult and costly for a superannuation provider to comply with the original requirements.
Superannuation — changes to the proportioning rule for members of the Military Superannuation and Benefits Scheme
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | -6.0 | -6.0 | -6.0 | -6.0 |
The Government has changed the superannuation proportioning rule to allow members of the Military Superannuation and Benefits Scheme (MSBS) to choose the taxable and tax free components of their benefit if they take non‑preserved amounts before reaching preservation age. This applies to all benefits taken on or after 1 July 2007.
The proportioning rule requires that superannuation benefit payments made to members comprise a tax free component and a taxable component in the same proportion as in the member's underlying superannuation interest.
This measure ensures MSBS members can continue to choose the components of pre‑1 July 1999 non‑preserved benefits they receive prior to preservation age, as they were able to do before 1 July 2007, without being forced by the proportioning rule to pay tax.
Superannuation — payment of tax free benefits to the terminally ill
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | -15.0 | -25.0 | -25.0 | -25.0 |
The Government will make lump sum superannuation benefits paid to individuals with a terminal illness tax free, with effect from 12 September 2007. The Government will also create a new condition of release for superannuation so that individuals in this situation have full access to their benefits, irrespective of their age.
Currently, individuals under the age of 55 who access a lump sum superannuation benefit from a taxed superannuation fund are subject to a maximum tax rate of 21.5 per cent (inclusive of the Medicare levy). This tax is generally withheld by the superannuation fund when it makes the lump sum payment. The Commissioner of Taxation has varied the withholding rate for people in this situation so that no withholding is required when these payments are made.
Further details of this measure will be determined in consultation with the superannuation industry, the medical profession and support groups.
Further information is contained in the Minister for Revenue and Assistant Treasurer's press release of 11 September 2007.
Superannuation — payment of temporary residents' superannuation to the Australian Government
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | 220.0 | 415.0 | 290.0 |
| Related expense ($m) | ||||
| Australian Taxation Office | 10.0 | 10.0 | 10.0 | 10.0 |
| Department of Immigration and Citizenship | 2.0 | 2.0 | 2.0 | 2.0 |
| Total | 12.0 | 12.0 | 12.0 | 12.0 |
The Government will require all future superannuation contributions and balances for temporary residents to be paid to the Australian Government, with effect from 1 July 2008.
Under this measure, employers will still be required to pay Superannuation Guarantee contributions for temporary residents but will have the choice of continuing to make payments into a superannuation fund or paying contributions directly to the Australian Government. Superannuation providers will be required to transfer annually the balances (including existing balances) of superannuation accounts held by temporary residents to the Australian Taxation Office (ATO). The measure will not apply to superannuation contributions or balances of New Zealand citizens.
Temporary residents who permanently depart Australia will be able to claim back their superannuation within five years of permanent departure (subject to existing withholding tax arrangements). Temporary residents who become permanent residents will be able to have their superannuation transferred back from the Government into a superannuation fund (with interest).
Currently, the superannuation balances of temporary residents remain in their superannuation fund unless they request payment after permanently departing.
The measure will enable the Government to establish a register of temporary residents' superannuation, making it easier for those people to locate and claim their superannuation. It will also ameliorate the problem of small balances becoming lost in the superannuation system and potentially being eroded by fees and charges.
The costs for the ATO and the Department of Immigration and Citizenship to administer this measure have not yet been finalised, however, a provision for these costs has been made.
Superannuation — reducing the incidence of employers having to pay superannuation contributions twice for the same quarter
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | -0.1 | 0.1 | 0.3 |
The Government will allow late superannuation guarantee (SG) contributions made for an employee by an employer to be used to offset any part of an SG charge liability that relates to that employee.
Currently, these contributions cannot be used to reduce an SG charge liability for a previous quarter unless the contributions were made on or after 1 January 2006 and within a period of 30 days after the due date. Consequently, where the contribution is made more than 30 days after the due date, the employer may effectively pay twice for an employee in respect of the same period.
This measure will reduce the incidence of disproportionately harsh penalties being incurred by some employers who attempt to do the right thing by their employees and incorrectly pay contributions to a superannuation provider rather than paying the SG charge to the Australian Taxation Office.
The measure will apply in respect of employers who elect to use the offset after the date of Royal Assent. Employers who have been assessed with the SG charge before this date can use the offset, provided the SG charge has not already been paid.
Taxation of Financial Arrangements — implementation of tax timing and tax hedging rules
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | * | * | * | * |
The Government will defer new rules for the taxation of gains and losses from financial arrangements until 1 July 2009. Taxpayers may elect to have the new rules apply from 1 July 2008.
The Government has also decided not to include specific integrity rules addressing synthetic arrangements. It will consider the need for such rules following further consultation.
Further information can be found in the press release of 20 September 2007 issued by the Minister for Revenue and Assistant Treasurer.
Taxation of option rights — deferral of taxing point
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | - | - | - |
The Government will allow taxpayers to defer the taxing point for option rights so that a tax liability does not arise at the time the rights are issued, with effect from the 2001‑02 income year.
The High Court recently determined that the market value of an option right issued to a shareholder is taxable as ordinary income at the time of issue. Any subsequent increase in the value of these rights is generally taxed as a capital gain or through the trading stock provisions.
This measure will restore the long‑standing taxation treatment of rights issues by ensuring that shareholders will not derive assessable income at the time an option right is issued but are taxed wholly through the capital gains tax regime or through the trading stock rules.
Further information can be found in the press release of 26 June 2007 issued by the Minister for Revenue and Assistant Treasurer.
Thin capitalisation — application of accounting standards
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Taxation Office | - | * | * | * |
The Government will allow taxpayers to elect to use a valuation methodology other than the current accounting standard for certain intangible assets and to exclude certain other assets and liabilities for thin capitalisation reporting purposes. This measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.
Under the thin capitalisation rules, entities are required to use accounting standards to value assets, liabilities and equity capital. Differences between the Australian equivalents to International Financial Reporting Standards adopted in 2005 and the previous accounting standards have produced substantially different thin capitalisation positions for some entities.
This measure will enable recognition of the economic value of certain assets and provide greater certainty for thin capitalisation reporting entities in relation to future investment activity.
Further information can be found in the press release of 12 September 2007 issued by the Minister for Revenue and Assistant Treasurer.
Verification measures to support new arrangements concerning liquids, aerosols and gels and the sealed bag scheme
| 2007-08 | 2008-09 | 2009-10 | 2010-11 | |
|---|---|---|---|---|
| Australian Customs Service | -0.1 | -0.3 | -0.4 | -0.4 |
| Australian Taxation Office | -0.9 | -3.7 | -4.6 | -4.6 |
| Total | -1.0 | -4.0 | -5.0 | -5.0 |
The Government will introduce new regulatory arrangements to allow for the verification of export of liquids, aerosols and gels (LAGs) sold through the sealed bag scheme, to take account of changes in airport security arrangements.
Since 31 March 2007, travellers have been unable to carry LAGs items greater than 100 millilitres in carry‑on luggage. As a result, it is no longer possible to verify that LAGs items have been exported by a physical check of items at the Customs barrier.
This measure will confirm the interim arrangements for export verification by allowing travellers to pack LAGs items in their checked luggage. Travellers will provide proof of export by way of a declaration on the goods dockets that will be handed to collection agents after the Customs barrier.
As this measure also affects goods and services tax revenue, it is subject to the unanimous agreement of the States and Territories.
