Australian Government, 2010‑11 Budget
Budget

Part 2: Revenue Measures (Continued)

Treasury

Consolidation — operation of the rules following a demerger

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - - - - -

The Government will extend the demerger relief provisions so that, when entities with net liabilities demerge from a consolidated group and immediately form a new consolidated group, capital gains that arise for the old group are disregarded and the new group retains the tax costs of its assets, with effect from the date of announcement. Transitional rules will apply where capital gains have arisen because entities with net liabilities demerged from a consolidated group and immediately formed a new consolidated group prior to the date of announcement. This measure has no revenue impact.

This measure will remove tax impediments that arise for consolidated groups following a demerger.

This measure was originally reported in the Pre-Election Economic and Fiscal Outlook 2010.

Corporations law amendments — consequential amendment to the tax law

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - * * * *

The Government has amended the Income Tax Assessment Act 1936 to clarify that the assessable income of shareholders includes dividends that are paid by companies out of something other than profits, with effect from 28 June 2010. This measure will have an ongoing unquantifiable revenue impact.

This measure was originally reported in the Economic Statement 2010.

European Bank for Reconstruction and Development — increased capital

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Department of the Treasury 14.1 - - - -

As part of a general capital increase for the European Bank for Reconstruction and Development (EBRD) an additional 1,010 paid-in shares at €10,000 per share were provided to the Government. These additional shares were worth A$14.1 million when they were received.

Australia will also join with other countries in increasing its uncalled capital subscription by €90.0 million. The EBRD has never drawn on its uncalled capital subscriptions.

This is consistent with Australia's G-20 commitment to ensure that the multilateral development banks are adequately resourced.

Exempting from taxation laws certain transactions involving security agencies

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office * * * * *
Department of the Treasury * * * * *

The Government has provided the heads of the Australian Security Intelligence Organisation and the Australian Secret Intelligence Service with the power to declare that Commonwealth tax laws do not apply to a specified entity in relation to a specified transaction. This ensures that the tax authorities will not need to obtain information that should remain secret in the interests of national security. This measure will have an ongoing unquantifiable revenue impact.

This measure was originally reported in the Economic Statement 2010.

International tax — additional benefits agreement between Australia and the Marshall Islands

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - .. .. .. ..

The Government has signed an additional benefits agreement with the Marshall Islands. This agreement allocates taxing rights over certain income derived by individuals between Australia and the Marshall Islands. This measure will have an ongoing negligible revenue impact.

This agreement allocates taxing rights over income from pensions, annuities, government services and certain payments made to visiting students and business apprentices. The agreement also establishes an administrative mechanism to help resolve transfer pricing disputes between Australia and the Marshall Islands.

This agreement was signed in conjunction with a tax information exchange agreement, which provides for the full exchange of information in relation to Australia's federal taxes and the taxes of the Marshall Islands.

This measure was originally reported in the Economic Statement 2010.

International tax — amending the withholding tax definition of a managed investment trust

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - * * * *

The Government has amended the withholding tax definition of a managed investment trust. The definition has been amended to include wholesale and government owned trusts, a requirement that a substantial proportion of the investment management activities in relation to Australian assets be carried out in Australia, a trading trust exclusion, a closely held exclusion and recognition of the widely held nature of certain types of investors. This measure will have an ongoing unquantifiable revenue impact.

Certain distributions by managed investment trusts to foreign investors of countries with which Australia has exchange of information on tax matters are subject to a reduced final withholding tax of 15 per cent (typically from 2009-2010) and ultimately 7.5 per cent (typically from 2010-2011). Foreign investors of countries with which Australia does not have exchange of information will be subject to a 30 per cent final withholding tax.

Further information can be found in the press release of 24 June 2010 issued by the former Assistant Treasurer.

This measure was originally reported in the Economic Statement 2010.

International tax — tax information exchange agreement with the Marshall Islands

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - * * * *

The Government has signed a tax information exchange agreement with the Marshall Islands. This agreement will enter into force after both jurisdictions advise that they have completed their domestic requirements. This measure will have an ongoing small but unquantifiable revenue impact.

This measure allows for the full exchange of information in relation to Australia's federal taxes and the taxes of the Marshall Islands.

This measure was originally reported in the Economic Statement 2010.

Minor amendments to the GST Regulations

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - - - - -
Australian Taxation Office - - - - -

The Government will make minor amendments to the Goods and Services Tax (GST) regulations to correct references to the Corporations Law. GST regulations currently refer to the Corporations Law, however when the Corporations Act was passed in 2001, the Corporations Law was repealed. While a number of consequential amendments were made to the GST Act at the time, references in the GST regulations were not amended. These minor amendments are part of the Government's commitment to the care and maintenance of the tax law. This measure has no revenue impact.

This measure was originally reported in the Economic Statement.

Minor refinements to taxation of financial arrangements provisions

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office * * * * *

The Government will make minor policy and technical refinements to the taxation of financial arrangements provisions to provide certainty and clarity on the operation of the law. This measure will have an ongoing unquantifiable but negligible revenue impact.

Further information can be found in the press release of 29 June 2010 issued by the former Assistant Treasurer.

This measure was originally reported in the Economic Statement 2010.

Personal income tax — exemption of pay and allowances for Operation RIVERBANK personnel

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - .. .. .. -

The Government has extended the income tax exemption for base pay and allowances paid to Australian Defence Force personnel deployed on Operation RIVERBANK until 31 December 2011. This measure will have a cost to revenue expected to be negligible over the forward estimates period.

This measure was originally reported in the Economic Statement 2010.

Philanthropy — updating the list of specifically listed deductible gift recipients

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - .. -1.3 -1.3 -0.1

Between the 2010‑11 Budget and the 2010 Pre-Election Economic and Fiscal Outlook, the following organisations were approved as deductible gift recipients (DGRs):

  • One Laptop per Child Australia Ltd, from 27 May 2010 until 30 June 2012;
  • The Charlie Perkins Trust for Children and Students, from 2 August 2010 until 2 August 2013; and
  • The Roberta Sykes Indigenous Education Foundation, from 2 August 2010 until 2 August 2013.

Taxpayers may claim an income tax deduction for certain gifts of money or property to DGRs. This measure has an estimated cost to revenue of $2.7 million over the forward estimates period.

This measure was originally reported in the Economic Statement 2010.

Reportable employer superannuation contributions — clarification of the 2008‑09 Budget measure

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - - - - -

The Government will amend the definition of reportable employer superannuation contributions to confirm that it does not include employer superannuation contributions prescribed by law or other requirement that the employee and their employer cannot directly control. Legislation to give effect to this measure will apply from 1 July 2009 which is when the definition commenced. The measure will have no revenue impact.

Reportable employer superannuation contributions are assessed in determining eligibility for means-tested government assistance programs. They are superannuation contributions made on behalf of an individual over which the individual has capacity to influence.

Further information can be found in the press release of 30 June 2010 issued by the former Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services.

This measure was originally reported in the Economic Statement 2010.

Stronger, fairer, simpler — improved resource taxation arrangements

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - - - -1,000.0 -6,500.0

The Government will implement improved resource taxation arrangements for Australia's largest and most profitable commodities: iron ore, coal, oil and gas. These new arrangements will ensure that the Australian community receives a fairer share of resource profits gained from these non-renewable resources. Together, they represent three‑quarters of the value of our resource operating profits and exports and account for an even greater share of resource rents in the mining industry.

From 1 July 2012:

  • a new Minerals Resource Rent Tax (MRRT) regime will apply to the mining of iron ore and coal in Australia; and
  • the current Petroleum Resource Rent Tax (PRRT) regime will be extended to all Australian onshore and offshore oil and gas projects, including the North West Shelf.

The MRRT will apply at an internationally competitive rate of 30 per cent to taxpayers with MRRT assessable profits above a $50 million per annum threshold. In addition, the MRRT will provide a 25 per cent extraction allowance to further shield the contribution of the miner's expertise to profits at the mine gate from the tax.

To ensure a smooth implementation of the new arrangements the Government is establishing a Policy Transition Group, which will consult with industry and advise the Government on the implementation of the new MRRT and PRRT arrangements.

Further information is available in the joint press release of the Prime Minister, Deputy Prime Minister and Treasurer and Minister for Resources and Energy, of 2 July 2010, and the A New Resource Taxation Regime fact sheet, available at www.futuretax.gov.au.

This measure was originally reported in the Economic Statement 2010.

Stronger, fairer, simpler — early cut to the company tax rate for small business companies

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - - - 200.0 150.0

As a result of the new resource taxation arrangements, the Government will amend the measure relating to the reduction of the company tax rate for small business companies announced in the 2010‑11 Budget. As announced on 2 July 2010, the Government will proceed with an early cut in the company tax rate cut for small business companies to 29 per cent, rather than 28 per cent (as announced on 2 May 2010), from the 2012‑13 income year. This measure will result in a gain to revenue estimated to be $350 million over the forward estimates period.

This measure was originally reported in the Economic Statement 2010.

Stronger, fairer, simpler — revised company tax cut

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - - - - 600.0

As a result of the new resource taxation arrangements, the Government will amend the measure relating to the reduction in the company tax rate previously announced in the 2010‑11 Budget. As announced on 2 July 2010, the company tax rate will be reduced to 29 per cent in the 2013‑14 income year but will not be further reduced to 28 per cent in the following 2014-15 income year. This measure will result in a gain to revenue estimated to be $600 million over the forward estimates period.

This measure was originally reported in the Economic Statement 2010.

Stronger, fairer, simpler — revised growth dividend

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Customs Service - - - -1.0 -3.0
Australian Taxation Office - - - -99.0 -197.0
Total - - - -100.0 -200.0
Department of the Treasury - - - -16.0 -31.0

The estimated value of the growth dividend associated with the Government's tax plan announced in the 2010‑11 Budget will be reduced, after taking into account changes to the resource super profits tax announced on 2 July 2010. The estimate of the growth dividend included in the 2010‑11 Budget was based on removal of the economic impact of State royalties and a 2 per cent reduction in the company tax rate. This measure will have a cost to revenue estimated to be $300 million over the forward estimates period.

Further information on the changes to the Government's tax plan is available in the joint press release of the Prime Minister, Deputy Prime Minister and Treasurer and Minister for Resources and Energy of 2 July 2010.

This measure was originally reported in the Economic Statement.

Superannuation — account based pensions — extension of drawdown relief for retirees

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - -3.0 -9.0 - -
Department of Families, Housing, Community Services and Indigenous Affairs - 15.0 - - -

The Government has halved the minimum payment amounts for account-based pensions for 2010‑11. This measure has an estimated cost to revenue of $12 million over two years. The measure is also expected to increase Government expenditure by $15 million in 2010‑11 through higher pension outlays.

Reducing the minimum payment amounts for account-based pensions will assist holders of these products to recoup capital losses incurred as a result of the global financial crisis. The measure extends the pension drawdown relief provided by the Government for the 2008‑09 and 2009‑10 years.

The reduction in the minimum payment amounts applies to account-based, allocated and market-linked (term allocated) pensions.

Further information can be found in the joint press release of 30 June 2010 issued by the Deputy Prime Minister and Treasurer, former Assistant Treasurer, and former Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services.

This measure was originally reported in the Economic Statement 2010.

Superannuation — enabling the confiscation of the proceeds of crime from superannuation

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
Australian Taxation Office - * * * *

The Government will allow court orders under State and Territory legislation for the confiscation of the proceeds of crime to apply to superannuation assets. This measure will result in an unquantifiable loss to revenue over the forward estimates period.

Superannuation operating standards relating to the circumstances in which superannuation benefits may be paid out of or transferred within the superannuation system prevent superannuation trustees from recognising a confiscation order for the proceeds of crime. This measure will ensure that superannuation funded directly with the proceeds of crime is recoverable by a court.

This measure was originally reported in the Economic Statement 2010.

Taxation laws — minor amendments

Revenue ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14
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 will have an ongoing unquantifiable, but expected to be minor, revenue impact.

This measure was originally reported in the Economic Statement 2010.

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