SCHEDULE 1 to the Bill amends the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to maintain the integrity of the GST tax base by ensuring that the interaction between the margin scheme provisions and the going concern, farmland and associates provisions does not allow property sales to be structured in a way that results in GST not applying to the value added to real property on or after 1 July 2000 by an entity registered or required to be registered for GST. This measure has effect from the date of Royal Assent. This measure was announced in the 2008-09 Budget: see 2008 TAXVINE No 18 (22) (13 May 2008).
SCHEDULE 2 to the Bill modifies the thin capitalisation regime contained within Div 820 of ITAA 1997 in relation to the use of accounting standards for identifying and valuing an entity’s assets, liabilities and equity capital. It aims to adjust for certain impacts of the 2005 adoption of Australian equivalents to International Financial Reporting Standards on the thin capitalisation position of complying entities. The amendments will apply to assessments for each income year commencing on or after the date of Royal Assent. The Treasurer and the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs jointly announced the amendments in Media Release No 2008/53: see 2008 TAXVINE No 18 (25) (13 May 2008).
SCHEDULE 3 to the Bill amends s 128F of ITAA 1936 to extend eligibility for exemption from interest withholding tax to bonds issued in Australia by state and territory central borrowing authorities. This amendment applies to interest paid on or after the date of Royal Assent. This measure was announced in the Treasurer’s Media Release No 2008/058 (20 May 2008): see 2008 TAXVINE No 32 (17) (15 August 2008).
SCHEDULE 4 to the Bill amends the Fringe Benefits Tax Assessment Act 1986 to ensure that the 'otherwise deductible rule' applies appropriately to benefits provided in relation to investments that the employee holds jointly with a third party.
These amendments will apply from 7:30 pm Australian Eastern Standard Time (AEST) on 13 May 2008. For employees who have entered into a salary sacrifice arrangement with their employer before 7:30 pm (AEST) on 13 May 2008 and which involves an expense payment fringe benefit related to the investment, the existing treatment continues to apply to benefits provided until 1 April 2009. For employees who have entered into a loan arrangement before 7:30 pm (AEST) on 13 May 2008, the existing treatment that currently applies to the loan benefit continues to apply to benefits provided until 1 April 2009.
This measure was announced in the 2008-09 Budget and in the Treasurer’s Media Release No 2008/48: see 2008 TAXVINE No 18 (20) (13 May 2008).
SCHEDULE 5 to the Bill amends Div 6C of ITAA 1936 to streamline and modernise the eligible investment business rules for managed funds. These amendments will:
- clarify the scope and meaning of investing in land for the purpose of deriving rent;
- introduce a 25% safe harbour allowance for non-rental, non-trading income from investments in land;
- expand the range of financial instruments that a managed fund may invest in or trade; and
- provide a 2% safe harbour allowance at the whole of trust level for non-trading income.
This measure will apply to the income year of Royal Assent and later income years. This measure was announced in the 2008-09 Budget.
In a media release issued on 25 September 2008, the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, Chris Bowen, commented on the amendments to Div 6C. Mr Bowne said: "These amendments will make it easier for managed funds to comply with the law and reduce the scope for such trusts to breach Division 6C inadvertently, thus lowering compliance costs for industry, the ATO and investors. The Government has been mindful not to pre-empt the Board of Taxation review and therefore more significant policy changes have not been contemplated at this time."
For a copy of Mr Bowne's media release, No 2008/80, 25 September 2008, go here.
For a copy of Tax Laws Amendment (2008 Measures No 5) Bill 2008, go here.
For a copy of the Explanatory Memorandum, go here.