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Treasury

Carbon Pollution Reduction Scheme — minor modifications to income tax treatment

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government will clarify the income tax treatment of units under the Carbon Pollution Reduction Scheme (CPRS), with effect from the introduction of the CPRS. This measure has an ongoing unquantifiable revenue impact.

The Government will allow taxpayers additional flexibility in valuing emissions units held at the end of an income year and allow taxpayers to deduct expenses incurred in ceasing to hold a registered emissions unit. The Government will also clarify the income tax treatment of emissions units transferred from a foreign registry to the Australian National Registry and the treatment given to units held by an entity that ceases to be taxable in Australia.

Further detail is contained in the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 and accompanying explanatory memorandum.

Carbon Pollution Reduction Scheme — transitional income tax treatment of units already on the National Registry

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	..	..	..	..

The Government will clarify the income tax treatment of emissions units already on the National Registry when the Carbon Pollution Reduction Scheme (CPRS) commences. Emissions units will be deemed to be sold and repurchased at cost in order to avoid the taxation of unrealised gains. This measure will have an ongoing negligible revenue impact.

When the CPRS commences, the existing income tax treatment will finish and the units will be subject to the specific income tax provisions for emissions units under the CPRS.

Excise and customs duty — maintain current taxation treatment for concessional spirits

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will clarify the excise law to ensure that imported high‑strength spirits blended with domestically produced high‑strength spirits are free of duty under the concessional spirits scheme, with effect from the date of Royal Assent of the amending legislation. These spirits are generally not intended for consumption as an alcoholic beverage and the proposed changes will allow current practice to continue. This measure has no revenue impact.

Forestry managed investment schemes — technical amendments to holding period rules

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	..	..	..	..

The Government will amend the tax law to allow investors in forestry managed investment schemes (MIS) to retain an up‑front tax deduction in situations where, for reasons genuinely outside their control, a capital gains tax event occurs within four full income years of their initial investment in the scheme. This will have effect from 1 July 2007. This measure will have an ongoing negligible revenue impact.

The Government will also amend the tax law to ensure that civil penalties can continue to apply to promoters of forestry MIS notwithstanding that investors in the scheme are allowed to retain their up‑front deductions because of the amendment to the holding period rules.

Further information can be found in the press release of 21 October 2009 issued by the Assistant Treasurer.

GST — Government response to Board of Taxation report — minor changes

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	*	*	*
Related expense ($m)
Australian Taxation Office	-	-	..	..	..
Department of the Treasury	-	-	*	*	*
Total	-	-	*	*	*

The Government will make a number of minor revisions to its 2009‑10 Budget measure in response to the Board of Taxation's recommendations from its review of the legal framework for the administration of the goods and services tax (GST). This measure is expected to have an ongoing unquantifiable revenue impact. It is also expected to have an ongoing unquantifiable impact on GST payments to the States and a negligible ongoing impact on fuel tax credit expenditure.

This measure addresses issues identified during consultations on, and further development of, the previously announced measure. These changes include:

extending the four‑year time limit on claiming credits to include fuel tax credits;
clarifying the Commissioner's power to recover overpaid refunds to refunds of luxury car tax and fuel tax credits;
modifying the approach to clarifying the GST treatment of gambling transactions; and
not proceeding with the announced changes to the financial acquisitions threshold, but instead examining it in the context of the current review of GST financial supply provisions.

Income tax exemption — Global Carbon Capture and Storage Institute

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will exempt the Global Carbon Capture and Storage Institute from income tax. The Institute will be income tax exempt for four years from 1 July 2009 on certain conditions that aim to ensure its continued broad public benefit, consistent with other income tax exempt organisations. This measure has no revenue impact.

The Institute is a not‑for‑profit organisation that aims to accelerate the global adoption of safe, commercially and environmentally sustainable carbon capture and storage technology.

Interest withholding tax — extension of eligibility for exemption to Commonwealth Government Securities

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-25.0	-65.0	-90.0	-105.0
Related expense ($m)
Australian Office of Financial Management	-	-11.6	-42.9	-76.5	-100.5

The Government will extend the eligibility for exemption from interest withholding tax (IWT) to Commonwealth Government Securities (CGS), with effect from the day after the enabling legislation receives Royal Assent. The eligibility for exemption from IWT will also extend to Commonwealth‑issued debt. The measure is estimated to have an ongoing cost to revenue, including a cost of $285.0 million over the forward estimates period. The related reduction in the Government's interest costs is expected to decrease government expenditure by $231.5 million over the forward estimates period.

This measure will help improve the neutrality of the tax system and bring Australia's tax treatment of CGS into line with most other countries, including the United States and the United Kingdom. The measure is expected to increase the demand for CGS and reduce the Government's interest costs.

Further information can be found in the joint press release of 21 August 2009 issued by the Treasurer and Assistant Treasurer.

International tax — Australia‑Belgium tax protocol

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government signed a protocol to upgrade the exchange of information provisions in Australia's tax treaty with Belgium on 24 June 2009, which will enter into force after both countries advise that they have completed their domestic requirements. This measure has an ongoing unquantifiable revenue impact.

The measure will allow for the full exchange of information in relation to Australia's federal taxes and Belgium's taxes.

Further information can be found in the press release of 25 June 2009 issued by the Assistant Treasurer.

International tax — Australia‑Cook Islands taxation agreement

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	*	*	*

The Government signed the Australia‑Cook Islands Taxation Agreement on 27 October 2009 in the Cook Islands. This agreement will allocate taxing rights over certain income derived by individuals between the two jurisdictions. This measure has an ongoing unquantifiable revenue impact.

The measure will allocate taxing rights over income from pensions, annuities, government services and certain payments made to visiting students and business apprentices. The measure will also establish an administrative mechanism to help resolve transfer pricing disputes.

The agreement was signed in conjunction with a tax information exchange agreement between Australia and the Cook Islands, which will provide for bilateral cooperation to prevent tax avoidance and evasion. Jointly, the two agreements will promote greater economic and administrative cooperation.

Further information can be found in the press release of 28 October 2009 issued by the Assistant Treasurer.

International tax — Australia‑Gibraltar tax information exchange agreement

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government signed the Australia‑Gibraltar tax information exchange agreement on 25 August 2009, which will enter into force after both jurisdictions advise that they have completed their domestic requirements. This measure has an ongoing unquantifiable revenue impact.

The measure will allow for the full exchange of information in relation to Australia's federal taxes and Gibraltar's income tax.

Further information can be found in the press release of 26 August 2009 issued by the Assistant Treasurer.

International tax — Australia‑Guernsey taxation agreement

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government signed the Australia‑Guernsey Taxation Agreement on 7 October 2009, which will allocate taxing rights over certain income derived by individuals between the two jurisdictions, with effect from 1 July 2011. This measure has an ongoing unquantifiable revenue impact.

The measure will allocate taxing rights over income from government services and certain payments made to visiting students and business apprentices. The measure will also establish an administrative mechanism to help resolve transfer pricing disputes.

The agreement was signed in conjunction with a tax information exchange agreement between Australia and Guernsey, which will provide for bilateral cooperation to prevent tax avoidance and evasion. Jointly, the two agreements will promote greater economic and administrative cooperation.

Further information can be found in the press release of 8 October 2009 issued by the Assistant Treasurer.

International tax — Australia‑Jersey taxation agreement

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government signed the Australia‑Jersey Taxation Agreement on 10 June 2009, which will allocate taxing rights over certain income derived by individuals between the two jurisdictions, with effect from 1 July 2010. This measure has an ongoing unquantifiable revenue impact.

The agreement was signed in conjunction with a tax information exchange agreement between Australia and Jersey, which will provide for bilateral cooperation to prevent tax avoidance and evasion. Jointly, the two agreements will promote greater economic and administrative cooperation.

Further information can be found in the press release of 15 June 2009 issued by the Assistant Treasurer.

International tax — Australia‑New Zealand double tax convention

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government signed a tax treaty to update Australia's taxation arrangements with New Zealand on 26 June 2009, which will enter into force after both countries advise that they have completed their domestic requirements. This measure has an ongoing unquantifiable revenue impact.

This measure will reduce withholding tax on certain dividends and certain interest and royalty payments, remove tax barriers to the cross‑border movement of people, and provide improved integrity measures. The Government will also amend the definition of dual listed company arrangement in the income tax law to align it with the corresponding definition in the New Zealand tax treaty.

Further information can be found in the joint press release of 29 June 2009 issued by the Assistant Treasurer and the Minister for Trade.

International tax — Australia‑Singapore tax protocol

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government signed a protocol to upgrade the exchange of information provisions in Australia's tax treaty with Singapore on 8 September 2009, which will enter into force 30 days after both countries advise that they have completed their domestic requirements. This measure has an ongoing unquantifiable revenue impact.

The measure will allow for the full exchange of information in relation to Australia's federal taxes and Singapore's taxes.

Further information can be found in the press release of 8 September 2009 issued by the Assistant Treasurer.

Non‑commercial loan rules — clarification of the 2009‑10 Budget measure

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will refine the targeting of the changes to the non‑commercial loan rules announced in the 2009‑10 Budget, by clarifying the scope of payments and other benefits that can give rise to a deemed dividend when they are provided to shareholders or their associates. The changes take effect from 1 July 2009. This measure has no revenue impact.

This measure will introduce an 'otherwise deductible' rule and exempt the use of certain types of residences by shareholders or their associates. The otherwise deductible rule will apply where a payment arises under the Budget measure due to the existence of a licence or a right to use company assets. The residence exemption will apply to the use of certain types of residences by shareholders or their associates where the residence is an integral part of the business real property owned by the private company, and the shareholder (or their associate) has a licence or right to use the business real property to carry on a business.

This measure will ensure that both the rural and small business communities are not unintentionally affected by the 2009‑10 Budget measure.

Further information can be found in the press release of 14 September 2009 issued by the Assistant Treasurer.

Personal income tax — exemption of income recovery subsidy payments for the North‑Western Queensland floods

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government has made the income recovery subsidy payments for the North‑Western Queensland floods of January and February 2009 exempt from income tax. These payments will also be excluded from the calculation of separate net income, which is used to determine entitlement to certain tax offsets. This measure has no revenue impact.

Personal income tax — exemption of payments made under the Continence Aids Payment Scheme

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will provide an income tax exemption for payments made under the Continence Aids Payment Scheme. The Government announced in the 2009‑10 Budget that it would replace the Continence Aids Assistance Scheme, which provides subsidised products to eligible recipients, with a direct payment under the Continence Aids Payment Scheme. This measure has no revenue impact.

Personal income tax — exemption of the Outer Regional and Remote Payment made under the Helping Children with Autism package

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will provide an income tax exemption for the Outer Regional and Remote Payment made under the Helping Children with Autism package. This payment is for families of children who have been diagnosed with Autism Spectrum Disorders, and is designed to assist families living in regional and remote areas to access early intervention and education services. This measure has no revenue impact.

Philanthropy — additional prescribed private funds

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-1.5	-19.8	-4.9	-6.0

Since the 2009‑10 Budget, the Government has approved 43 funds for prescription as prescribed private funds (PPFs), and seven funds have been declared no longer to be PPFs. Funds approved since the 2009‑10 Budget have an estimated ongoing cost to revenue of $32.2 million over the forward estimates period.

PPFs allow businesses, families and individuals to establish and donate to a charitable trust of their own, for the purpose of disbursing funds to a range of other deductible gift recipients.

Philanthropy — expanding the scope of allowable purposes for the 2009 Victorian Bushfire Appeal Fund

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will provide the Victorian Bushfire Appeal Fund Independent Advisory Panel with greater scope to support communities and individuals affected by the 2009 Victorian bushfires. The Panel oversees the expenditure of funds from the 2009 Victorian Bushfire Appeal Fund. This measure has no revenue impact.

The Government will permit funds in the Appeal Fund to be used for a broader range of purposes than the law considers charitable, without jeopardising the charitable status of the Australian Red Cross Society, which is the charity that collected the donations.

This measure applies to payments made by the Red Cross to the Appeal Fund after 28 January 2009 and before 6 February 2014.

Further information can be found in the joint press release of 17 August 2009 issued by the Assistant Treasurer and the Parliamentary Secretary for Victorian Bushfire Reconstruction.

Philanthropy — updating the list of deductible gift recipients

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-1.8	-3.7	-3.9	-4.0

Since the 2009‑10 Budget, the Government has approved the following organisations as deductible gift recipients (DGRs):

United States Studies Centre; and
Green Institute.

In addition, there were:

55 admissions to, and 2 removals from, the Register of Cultural Organisations;
3 admissions to the Register of Harm Prevention Charities; and
12 admissions to the Overseas Aid Gift Deduction Scheme.

Taxpayers may claim an income tax deduction for certain gifts of money or property to DGRs. This measure has an ongoing cost to revenue of $13.4 million over the forward estimates period.

The Register of Cultural Organisations can be found on the Department of the Environment, Water, Heritage and the Arts website at www.arts.gov.au. The Register of Harm Prevention Charities can be found on the Department of Families, Housing, Community Services and Indigenous Affairs website at www.fahcsia.gov.au. The list of developing country relief funds on the Overseas Aid Gift Deduction Scheme can be found on the AusAID website at www.ausaid.gov.au.

Reforming the taxation of employee share schemes — further changes

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-10.0	-55.0	-15.0	15.0

The Government will revise the 2009‑10 Budget measure to reform the taxation of employee share schemes.

Key differences between this measure and the Budget measure are:

the introduction of an annual reporting requirement and associated withholding arrangements for providers of employee share schemes;
the reintroduction of deferral of taxation for employee share schemes where the benefits provided are at real risk of forfeiture, or where the benefits are provided under salary sacrifice arrangements;
an increase to the income tax threshold for eligibility for the upfront tax concession from $60,000 to $180,000; and
the modification of rules relating to the refund of income for forfeited benefits.

The new employee share scheme rules have effect from 1 July 2009.

The changes have an estimated cost to revenue of $65.0 million over the forward estimates.

Further information can be found in the press release of 1 July 2009 issued by the Assistant Treasurer.

Removing the tax deductibility of political donations — amendments

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-6.5	-6.6	-7.2	-7.5

The Government will continue to allow tax deductibility of political donations for individuals. This measure revises the 2008‑09 Budget measure which sought to remove tax deductibility of political donations for both individuals and businesses. This measure will have an estimated cost to revenue of $27.8 million over the forward estimates period.

Consistent with the original measure, businesses will not be able to deduct political donations. Individuals will continue to be able to claim a capped deduction for political donations or a general deduction for certain membership contributions.

This measure will apply to donations and contributions from the 2008‑09 financial year onward.

Taxation laws — income tax law rewrites

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	..	..	..

The Government will rewrite certain provisions from the Income Tax Assessment Act 1936 into either the Income Tax Assessment Act 1997 or the Taxation Administration Act 1953 as part of the ongoing work of completing the rewrite of the 1936 Act. This measure has a negligible ongoing revenue impact.

The rewrites will preserve the outcomes under the existing law but use the language, structure and drafting approach used in the 1997 Act and the Administration Act.

Taxation laws — minor amendments

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	..	*	*	*	*

The Government will make a number of minor amendments to the taxation laws to correct deficiencies and improve certainty for taxpayers. These minor amendments are part of the Government's commitment to the care and maintenance of the tax law.

The amendments include rectifying incorrect terminology, correcting grammatical errors, repealing inoperative material, clarifying ambiguities, and ensuring provisions are consistent with the original policy intent.

This measure has an ongoing unquantifiable revenue impact.

Taxation of Financial Arrangements — technical refinements to new regime

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	*	*	*	*

The Government will amend the income tax law relating to the Taxation of Financial Arrangements in order to further reduce compliance costs and ensure the provisions operate as intended. This measure has an ongoing unquantifiable revenue impact.

Further information can be found in the press release of 4 September 2009 issued by the Assistant Treasurer.

Total and Permanent Disability (TPD) insurance premiums — deductibility by superannuation funds

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government will provide transitional relief to complying superannuation funds to allow them to continue to deduct the cost of insurance premiums relating to disability superannuation benefits, in line with existing industry practice. The transitional provisions will apply for the period from 1 July 2004 to 30 June 2011. This measure will have no revenue impact as it continues existing industry practice.

From 1 July 2011, insurance premiums will revert to only being deductible to the extent the policies have the necessary connection to a liability of the fund to provide disability superannuation benefits to its members.

This measure will minimise disruption to the industry and provide funds with lead time to make the necessary administrative changes.

Further information can be found in the press release of 13 October 2009 issued by the Minister for Financial Services, Superannuation and Corporate Law.

Worker entitlement funds

Revenue ($m)
	2008‑09	2009‑10	2010‑11	2011‑12	2012‑13
Australian Taxation Office	-	-	-	-	-

The Government has agreed to list three funds as worker entitlement funds:

Tronics Employee Entitlement Scheme Trust;
Shaw's Darwin Transport Employees' Entitlement Trust; and
Fisher & Paykel Termination Funding Trust.

Listing a fund as an approved worker entitlement fund ensures certain payments to the fund are not taxed twice (once on entry to the fund and once when the benefit is provided to the worker). This measure has no revenue impact.

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