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21 May 09 Exposure draft of minor amendments to tax laws

The Treasury on 20 May 2009 released an exposure draft of part of an amending Bill which is intended to be introduced as Tax Laws Amendment (2009 Measures No 4) Bill 2009. The exposure draft comprises Schedule 10 to the proposed Bill. It primarily relates to proposed minor amendments to the taxation laws.

The amendments seek to ensure the taxation law operates as intended, by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes. Some of the amendments deal with issues raised through the Tax Issues Entry System (TIES). The TIES website (www.ties.gov.au), which the ATO and Treasury jointly operate, provides a vehicle for tax professionals and the general public to raise issues relating to the care and maintenance of the tax system. The issues these minor amendments deal with include:
  • rectifying incorrect terminology
  • correcting grammatical errors
  • repealing inoperative material
  • clarifying ambiguities, and
  • ensuring provisions are consistent with the original policy intent.
Part 1 of the exposure draft concerns references to Australian Government Ministers, Departments and Secretaries; Part 2 concerns the proposed repeal of Part IV of the Taxation Administration Act 1953 (Cth); Part 3 concerns amendments relating to foreign income tax offsets and foreign losses; and Part 4 has other amendments.

More significant amendments include:
  • putting beyond any doubt that "real property" in the context of Div 855 of the ITAA 1997, relating to the types of assets known as "taxable Australian property" on which foreign residents pay capital gains tax, extends to a lease over land; this amendment will apply to CGT events happening on or after 20 May 1999
  • amending the rules in the income tax law relating to the foreign income tax offset and foreign losses to ensure that the offset is available only to Australian entities, relevant foreign losses converted into tax losses can be deducted in calculating a partnership's net income or loss, previously recouped foreign losses or CFC losses are not eligible to be convertible foreign losses or convertible CFC losses, the deduction limit for convertible foreign losses does not prevent later year tax losses from being deductible in the current year, and there is no possible double counting in relation to convertible foreign losses used by a subsidiary entity before it joined a consolidated group; this amendment will apply in relation to income years, statutory accounting periods and notional accounting periods starting on or after 1 July 2008
  • ensuring that the CGT small business concessions interact appropriately with Div 149 (loss of pre-CGT status) of the ITAA 1997; this amendment will apply in relation to payments made by a company or trust on or after the day this Bill receives Royal Assent (this issue having been identified through the TIES system)
  • amending the FBT law to ensure that gifts to deductible gift recipients do not result in an employer having an FBT liability; this amendment will apply to the FBT year starting on 1 April 2008 and later FBT years, and
  • ensuring that first home saver account trusts operated by superannuation funds are a "full self-assessment taxpayer" (as defined) for income tax purposes; this amendment will apply in relation to the 2009-10 and later income years.
All of the amendments in the exposure draft will apply from the date of Royal Assent unless otherwise stated.

The Treasury is calling for comments on the exposure draft. The closing date for submissions is Friday, 5 June 2009. Written submissions should be addressed to The General Manager, Tax Design Division, The Treasury, Langton Crescent, PARKES ACT 2600. Email submissions to: minortaxamendments@treasury.gov.au.

For a copy of the exposure draft amendments go here.

For a copy of the Explanatory Memorandum go here.

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