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11 Feb 10 2010 Measures No 1 Bill introduced into Parliament

On 10 February 2010, Tax Laws Amendment (2010 Measures No 1) Bill 2010 was introduced into the House of Representatives. The following is an extract from the Explanatory Memorandum:

SCHEDULE 1 to the Bill amends various parts of the superannuation legislation to support the Government’s 2008-09 Budget measure to provide a free superannuation clearing house service for small businesses. Date of effect is 1 July 2010.

For Government comment on the amendments, see the item in this edition of TAXVINE headed "Ministers comment on Superannuation Clearing House".

SCHEDULE 2 to the Bill amends ITAA 1997 and ITAA 1936 to protect the deductions of investors in forestry managed investment schemes where the four-year holding period rules are failed for reasons genuinely outside the investor’s control. The Schedule also amends the Taxation Administration Act 1953 to maintain the capacity of the Commissioner of Taxation to apply for civil penalties against the promoters of affected schemes, notwithstanding the amendments to the four-year rules. The amendments apply to CGT events happening on or after 1 July 2007.

SCHEDULE 3 to the Bill amends ITAA 1997 to allow eligible managed investment trusts (MITs) to make an irrevocable election (that is, choice) to apply the CGT provisions as the primary code for the taxation of gains and losses on disposal of certain assets (primarily shares, units and real property). If an MIT is eligible to make an election and it has not done so, then any gains or losses on the disposal of eligible assets (excluding land, an interest in land, or an option to acquire or dispose of such an asset) will be treated on revenue account. The Schedule also clarifies the taxation treatment of "carried interest" units in MITs. These units will effectively be treated on revenue account in the hands of the unit holder.

These amendments broadly apply in relation to eligible CGT events that happen on or after the start of the 2008-09 income year. The amendments which deem certain assets to be on revenue account when an election is not made, apply to disposals of assets, cessations of ownership of assets and other realisations of assets which take place on or after Royal Assent. The amendments concerning "carried interests" in MITs apply in relation to entitlements to distributions that arise on or after Royal Assent, or disposals of assets that happen on or after Royal Assent.

For the Assistant Treasurer's comments on the final form of the legislation, see the item in this edition of TAXVINE headed "Minister comments on changes to the taxation treatment of managed investment trusts".

For the Assistant Treasurer's announcement regarding further changes to the withholding tax definition of a managed investment trust, see the item in this edition of TAXVINE headed "Minister announces amendment to the withholding tax definition of a managed investment trust".

SCHEDULE 4 to the Bill amends Subdivision 61-J of ITAA 1997 by introducing an income test into the eligibility criteria for the entrepreneurs’ tax offset (ETO). The income test will restrict the eligibility of individuals whose income is over a threshold amount of income for ETO purposes ($70,000 if they are single and $120,000 if they have a family). This measure applies in relation to assessments for income years that commence on or after 1 July 2009.

SCHEDULE 5 to the Bill amends ITAA 1997 to

  • clarify the operation of certain aspects of the consolidation regime; and
  • improve interactions between the consolidation regime and other parts of the law.

Many of the amendments apply from 1 July 2002. Others apply from 1 July 2005, 27 October 2006, 8 May 2007, 1 July 2009 or from the date of introduction of this Bill into the House of Representatives. The amendments that are retrospective are beneficial to taxpayers.

These amendments were announced jointly in the Treasurer’s and the then Assistant Treasurer and Minister for Competition Policy and Consumer Affairs’ Media Release No 053 of 13 May 2008.

SCHEDULE 6 to the Bill makes technical corrections and other miscellaneous amendments to the taxation laws. These amendments are part of the Government’s commitment to the care and maintenance of the tax system. These amendments commence from Royal Assent unless otherwise stated. These amendments were foreshadowed by release in draft form on the Treasury website on 30 November 2009.

In media release No 2010/022, 10 February 2010, the Assistant Treasurer, Senator Nick Sherry, commented on various aspects of the Bill. "This Bill meets our commitment on several taxation reform fronts to provide certainty for taxpayers and industry practitioners," the Assistant Treasurer said.


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