State of Tax Policy Report: December 2021

Written by the Tax Policy & Advocacy Team

   

Status of proposed and enacted tax measures

This Report sets out the status of the key tax and superannuation legislative measures.

Notes

  1. This Report includes only those measures which we consider are most relevant to our members. The full content of each Bill or Act (i.e. other schedules to the relevant Bill or Act not listed in this Report) is available by clicking on the relevant hyperlink containing the title of the Bill or Act.
  2. The selected enacted Acts listed are those that received Royal Assent during the 46th (current term of) Parliament which commenced on 2 July 2019. Parliament adjourned on Thursday 2 December 2021 and will resume on Tuesday 8 February 2022.
  3. Page cross-references throughout refer to the relevant page in this Report.
  4. A list of acronyms and abbreviations is on page 2 of this Report.
  5. For guidance, insights and resources on many of these measures, visit our member portal.

Quick links

Legislative references

Income Tax Assessment Act 1936

ITAA 1936

Income Tax Assessment Act 1997

ITAA 1997

Income Tax Rates Act 1986

ITRA

Income Tax (Transitional Provisions) Act 1997

IT(TP)A

Fringe Benefits Tax Assessment Act 1986

FBTAA

Superannuation Guarantee (Administration) Act 1992

SGAA

Superannuation Industry (Supervision) Act 1993

SISA

Taxation Administration Act 1953

TAA

 

Acronyms and other abbreviations

AAT

Administrative Appeals Tribunal

ABN

Australian Business Number

AEDT

Australian Eastern Daylight Time

AMIT

Attribution managed investment trust

ANAO

Australian National Audit Office

APRA

Australian Prudential Regulation Authority

ATO

Australian Taxation Office

Board

Board of Taxation

CCIV

Corporate collective investment vehicle

CGT

Capital gains tax

Commissioner

Commissioner of Taxation

CPI

Consumer price index

Director ID

Director identification number

DGR

Deductible gift recipient

DGTO

Digital games tax offset

Div | Subdiv

Division | Subdivision

ESS

Employee share scheme

FBT

Fringe benefits tax

FHSSS

First Home Super Saver Scheme

IAWO

Instant asset write-off

IGTO

Inspector-General of Taxation and Taxation Ombudsman

LITO

Low Income tax offset

LMITO

Low and Middle Income tax offset

NALI

Non-arm’s-length income

NANE

Non-assessable non-exempt (income)

NZ

New Zealand

OBU

Offshore banking unit

PDV tax offset

Post, digital and visual effects tax offset

PSI

Personal services income

R&D

Research and development

R&DTI

Research and Development Tax Incentive

s | ss

Section | Sections

SMSF

Self-managed superannuation fund

SG

Superannuation Guarantee

STP

Single Touch Payroll

UPE

Unpaid present entitlement

WHM

Working holiday maker

Key Acts enacted prior to issue of last State of Tax Policy Report: June 2021

Measure

Details of enacted Act

Start date

Personal income tax relief

Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Act 2019

  • Increases the base and maximum amounts of the Low and Middle Income tax offset (LMITO) for the 2018–19 to 2021–22 income years to $255 (from $200) and $1,080 (from $530), respectively.
  • Increases the amount of the Low Income tax offset (LITO) from the 2022–23 income year ensuring all taxpayers remain better off following the cessation of the LMITO in 2022–23.
  • Reduces the tax payable by individuals in the 2022–23 and later income years by increasing the amount of taxable income subject to the first personal rate of income tax of 19% to include an individual’s taxable income between $18,201 and $45,000 (rather than $41,000).
  • Reduces the tax payable by individuals in the 2024–25 and later income years by lowering the second personal rate of income tax to 30% (from 32.5%).

Enacted on 5 July 2019 as Act No. 52 of 2019

(See further personal income tax relief in following two items below)

Changes to LMITO: 2018–19 to 2021–22 income years

Changes to income tax thresholds and LITO: 2022–23 and later income years

Changes to income tax rates: 2024–25 and later income years

Accelerating the Personal Income Tax Plan

Schedule 1 to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020

Reduces the tax payable by individuals in the
2020–21 and later income years by increasing the amount of taxable income subject to the:

  • first personal rate of income tax of 19% to include an individual’s taxable income between $18,201 and $45,000 (rather than from 1 July 2022); and
  • second personal rate of income tax of 32.5% to include an individual’s taxable income between $45,001 and $120,000 (rather than from 1 July 2022).

Replaces the existing LITO with a new increased LITO for the 2020–21 and later income years of up to $700 (instead of up to $445).

Retains the LMITO for an additional year (being the 2020–21 income year). Base amount is $255 up to a maximum of $1,080.

(See extension of LMITO to 2021–22 on page 12)

Enacted on 14 October 2020 as Act No. 92 of 2020

No changes were made to the already legislated third and final stage of the Personal Income Tax Plan which will provide further personal income tax cuts from 1 July 2024.

Under the third and final stage, the tax payable by individuals in the 2024–25 and later income years will be reduced by:

  • lowering the second personal rate of income tax to 30% (from 32.5%); and
  • increasing the amount of taxable income subject to the second personal rate of income tax of 30% to include an individual’s taxable income between $45,001 and $200,000, thereby eliminating an entire tax bracket.

Changes to income tax rates: 2020–21 and later income years

Change to LITO: 2020–21 and later income years

Change to LMITO: 2020–21 income year

 

 

 

 

 

 

 

 

2024–25 and later income years

 

Superannuation minimum drawdown rates

Schedule 10 to the Coronavirus Economic Response Package Omnibus Act 2020

Halves the minimum payment amounts for account-based pensions for the 2019–20 and 2020–21 financial years. The current rates for minimum annual payments for superannuation income streams can be found on the ATO website.

Enacted on 24 March 2020 as Act No. 22 of 2020

The Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 supporting the announcement on 29 May 2021 to extend the temporary reduction in superannuation account-based pension minimum drawdown rates for a further year to 30 June 2022.

Legislative instrument registered on 24 June 2021

2019–20, 2020–21 and 2021–22 financial years

Director identification number regime

Schedule 2 to the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2019

Amends the Corporations Act 2001 to introduce a director identification number (director ID) requirement which requires all directors to confirm their identity. The director ID is a unique identifier for each person who consents to being a director.1

Enacted on 22 June 2020 as Act No. 69 of 2020

1 November 2021

STP reporting — child support information

Schedule 2 to the Treasury Laws Amendment (2020 Measures No. 2) Act 2020

Broadens the amounts that employers can voluntarily report under the STP rules to include employer withholding of child support deductions from salary or wages and child support garnishee amounts from salary or wages that are paid to the Child Support Registrar.

Employers who choose to report under STP to the ATO do not also have to report the amounts to the Child Support Registrar.

Enacted on 3 September 2020 as Act No. 79 of 2020

On 3 February 2021, the ATO registered a legislative instrument which outlines the Commissioner’s intention for voluntary reporting to commence from 4 January 2021, with employers required to have commenced reporting via the new Phase 2 pay event by 1 January 2022.2

On 9 October 2021, the ATO published guidance on its website to assist employers to understand and comply with the requirements under STP Phase 2 reporting.

1 January 2022

Temporary loss carry back

Schedule 2 to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020

Allows corporate tax entities with an aggregated turnover of less than $5 billion to carry back a tax loss for any or all of the 2019–20, 2020–21 and 2021–22 income years and apply it against the tax paid in a previous income year as far back as the 2018–19 income year.

Enacted on 14 October 2020 as Act No. 92 of 2020

(See enacted technical amendment to the loss carry back choice on page 15)

(See Bill before Parliament to extend this measure to the 2022–233 income year on page 23)

Assessments made between the 2020–21 and 2022–23 income years

Expanded access to small business tax concessions

Schedule 3 to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020

Enables eligible entities with an aggregated turnover of $10 million or more but less than $50 million to access a range of small business entity tax concessions.

Enacted on 14 October 2020 as Act No. 92 of 2020

In 3 phases, from 1 July 2020, 1 April 2021 and 1 July 2021

Reforms to R&D Tax Incentive

Schedules 4–6 to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020.4

Makes changes to the R&DTI, including:

  • linking the R&D tax offset for refundable R&D tax offset claimants (aggregated turnover less than $20 million) to claimants’ corporate tax rate plus an 18.5 percentage point premium;
  • increasing the R&D tax offset for non-refundable R&D tax offset claimants (aggregated turnover $20 million or more) with high levels of R&D intensity (attracting a premium of either 8.5 or 16.5 percentage points); and
  • increasing the R&D expenditure threshold from $100 million to $150 million and making the threshold a permanent feature.

Enacted on 14 October 2020 as Act No. 92 of 2020

1 July 2021

Making tax-free certain small business grants relating to COVID-19 recovery

Schedule 1 to the Treasury Laws Amendment (2020 Measures No. 5) Act 2020

Amends the income tax law to insert new s 59-97 into the ITAA 1997 which makes payments received by eligible businesses in the 2020–21 income year under certain grant programs administered by a State or Territory Government or authority non-assessable
non-exempt (NANE) income so that these payments are not subject to income tax by the Commonwealth.5

Enacted on 11 December 2020 as Act No. 118 of 2020

Assessments for the 2020–21 and later income years

Reuniting more superannuation

Treasury Laws Amendment (Reuniting More Superannuation) Act 2021

Amends the SISA and other laws to:

  • facilitate the closure of eligible rollover funds by 30 June 2021; and
  • allow the Commissioner to reunite amounts the ATO receives from eligible rollover funds with a member’s active account.

Enacted on 22 March 2021 as Act No. 24 of 2021

23 March 2021

Bring forward non-concessional contributions cap for those aged 65 and 66

Schedule 1 to the Treasury Laws Amendment (More Flexible Superannuation) Act 2021

Extends the bring forward rule by enabling individuals aged 65 and 66 to make up to 3 years of
non-concessional contributions under the bring forward rule.

Enacted on 22 June 2021 as Act No. 45 of 2021

Amendment commences on 1 July 2021 but applies to
non-concessional contributions made on or after 1 July 2020

COVID-19 re-contributions

Schedule 3 to the Treasury Laws Amendment (More Flexible Superannuation) Act 2021

Inserts s 292-103 into the ITAA 1997 to allow individuals to re-contribute amounts they withdrew under the COVID-19 early release of super program during either or both of the 2019–20 or 2020–21 financial years without them counting towards their
non-concessional contributions cap.

These contributions can be made between 1 July 2021 and 30 June 2030.

Enacted on 22 June 2021 as Act No. 45 of 2021

1 July 2021

Your Future, Your Super

Treasury Laws Amendment (Your Future, Your Super) Act 2021

  • Schedule 1 to the Act amends the SGAA to limit the creation of multiple superannuation accounts for employees who do not choose a superannuation fund when they start a new job.
  • Schedule 2 to the Act amends the SISA to require APRA to conduct an annual performance test for MySuper products and other products to be specified in regulations.
  • Schedule 3 to the Act amends the SISA to require each trustee, or each director of a corporate trustee, of a registrable superannuation entity and each trustee of a SMSF to perform the trustee’s duties and exercise the trustee’s powers in the best financial interests of the beneficiaries.

Enacted on 22 June 2021 as Act No. 46 of 2021

Schedule 1: Employment that starts on or after 1 July 2021

Schedule 2: MySuper: on and after 1 July 2021

Other products specified in the regulations: on and after 1 July 2022.

Schedule 3:
1 July 2021

SMSF membership limit

Treasury Laws Amendment (Self Managed Superannuation Funds) Act 2021

Increases the maximum number of allowable members in SMSFs and small APRA funds from four to six.6

Enacted on 22 June 2021 as Act No. 47 of 2021
(Bill introduced in the Senate)

1 July 2021

Medicare levy and Medicare levy surcharge income thresholds

Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 3) Act 2021

Implements the Federal Budget 2021–22 measure to increase the Medicare levy
low-income thresholds.

In particular, amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 to increase:

  • the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the CPI;
  • the Medicare levy low-income thresholds for individuals and families eligible for the seniors and pensioners tax offset (along with the dependent child/student component of the family threshold), in line with movements in the CPI; and
  • the Medicare levy surcharge.

Enacted on 29 June 2021 as Act No. 61 of 2021

2020–21 and later income years

Family Home Guarantee

Schedule 2 to the Treasury Laws Amendment (2021 Measures No. 3) Act 2021

Implements the Family Home Guarantee measure from the Federal Budget 2021–22.

In particular, amends the National Housing Finance and Investment Corporation Act 2018 to improve housing outcomes for Australians by assisting earlier access to the housing market by single parents with dependants.

Enacted on 29 June 2021 as Act No. 61 of 2021

1 July 2021

Recovery grants for 2021 floods and storms

Schedule 4 to the Treasury Laws Amendment (2021 Measures No. 3) Act 2021

Amends the ITAA 1997 to insert new s 59-99 into the ITAA 1997 which provides that a disaster recovery grant payment in relation to floods caused by rainfall that occurred between 19 February 2021 and 31 March 2021 and storms in the same period is NANE income.

Enacted on 29 June 2021 as Act No. 61 of 2021

Payments made in the 2020–21 and later income years

Tax-free treatment of certain small business grants relating to the Coronavirus recovery

Schedule 1 to the Treasury Laws Amendment
(COVID-19 Economic Response) Act 2021

Amends the income tax law to extend the concessional tax treatment in s 59-97 of the ITAA 1997 to payments received by eligible businesses in 2021–22 under eligible COVID-19 recovery grant programs administered by a State or Territory Government
(or a State or Territory authority).7

Enacted on 30 June 2021 as Act No. 71 of 2021

Exempts payments made in the 2021–22 financial year

Junior minerals exploration incentive extension

Schedule 2 to the Treasury Laws Amendment (2021 Measures No. 4) Act 2021

  • Extends the operation of the junior minerals exploration incentive in Div 418 of the ITAA 1997 for a further 4 years to continue to encourage mineral exploration companies to undertake greenfields minerals exploration in Australia.
  • Includes a reporting requirement for mineral exploration companies where no exploration investment has occurred to enable unused exploration credits to be identified earlier and reallocated.

Enacted on 30 June 2021 as Act No. 72 of 2021

2021–22 to 2024–25 income years (inclusive)

Exempting granny flat arrangements from CGT

Schedule 3 to the Treasury Laws Amendment (2021 Measures No. 4) Act 2021

Amends the CGT provisions in the ITAA 1997 to provide a targeted CGT exemption for CGT events that occur on entering into, varying or terminating formal written arrangements under which an older person or person with a disability acquires, varies or disposes of a granny flat interest.

The exemption operates by providing that no CGT event arises on entering into, varying or terminating a granny flat arrangement if the arrangement satisfies the requirements of the provisions.

The amendments ensure that CGT consequences are not an impediment to formalising granny flat arrangements and seek to reduce the risk of financial abuse and exploitation of older Australians and other vulnerable people.

Enacted on 30 June 2021 as Act No. 72 of 2021

1 July 2021

New Zealand sports teams members and support staff

Schedule 5 to the Treasury Laws Amendment (2021 Measures No. 4) Act 2021

Amends the International Tax Agreements Act 1953 to disregard days spent in Australia due to COVID-19 by NZ sportspersons on teams participating in cross-border competitions and their support staff in determining whether income derived from such competitions is taxable in Australia.

These amendments preserve the uniquely targeted outcome ordinarily achieved by Article 17(3) of the NZ Convention for NZ sporting professionals and their support staff, in circumstances affected by COVID-19.

Enacted on 30 June 2021 as Act No. 72 of 2021

From the start of the 2020–21 income year

Low and Middle Income tax offset

Schedule 6 to the Treasury Laws Amendment (2021 Measures No. 4) Act 2021

Amends the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 to make the LMITO available in the 2021–22 income year, with the offset now ceasing to be available in the 2022–23 income year and later income years.

Enacted on 30 June 2021 as Act No. 72 of 2021

2021–22 income year

Key Acts enacted since issue of last State of Tax Policy Report: June 2021

Measure

Details of enacted Act

Start date

Tax-free treatment of payments from COVID-19 business support programs

Schedule 3 to the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Act 2021

Amends the income tax law to insert new s 59-98 into the ITAA 1997 which treats payments received by eligible businesses in the 2021–22 income year under certain Commonwealth COVID-19 business support programs administered by the Commonwealth as NANE income so that the payments are not subject to income tax by the Commonwealth.8

Enacted on 10 August 2021 as Act No. 79 of 2021

Assessments for the 2021–22 and later income years

Tax-free treatment of COVID-19 disaster payments

Schedule 5 to the Treasury Laws Amendment
(COVID-19 Economic Response No. 2) Act 2021

Amends the income tax law to insert new s 59-96 into the ITAA 1997 which treats Commonwealth COVID-19 disaster payments to individuals as NANE income so that the payments are not subject to income tax by the Commonwealth.

Enacted on 10 August 2021 as Act No. 79 of 2021

Assessments for the 2020–21 and later income years

Deductible gift recipients

Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 2) Act 2021

Amends the ITAA 1997 to require a fund, authority or institution to, as a precondition for DGR endorsement, be:

  • a registered charity;
  • an Australian government agency; or
  • operated by a registered charity or an Australian government agency.

Enacted on 13 September 2021 as Act No. 110 of 2021

14 December 20219

Offshore banking units

Schedule 2 to the Treasury Laws Amendment (2021 Measures No. 2) Act 2021

Ends Australia’s OBU regime to:

  • remove the concessional tax treatment for OBUs;
  • remove the interest withholding tax exemption; and
  • close the regime to new entrants by removing the Minister’s ability to declare or determine an entity to be an OBU.

Enacted on 13 September 2021 as Act No. 110 of 2021

Changes to the concessional tax treatment are removed from the 2023–24 income year

Withholding tax changes apply from 1 January 2024

Requirement for actuarial certificates
for certain superannuation funds

Schedule 3 to the Treasury Laws Amendment (2021 Measures No. 6) Act 2021

Amends s 295-387 of the ITAA 1997 to remove the requirement for superannuation trustees to provide an actuarial certificate when calculating exempt current pension income (ECPI) using the proportionate method, where all members of the fund are fully in retirement phase for all of the income year.

Enacted on 13 September 2021 as Act No. 111 of 2021

1 October 2021

Australian Screen Production Incentive Reforms

Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 5) Act 2021

Amends Div 376 of the ITAA 1997 to:

  • increase the producer offset for films that are not feature films released in cinemas to 30%10 of total qualifying Australian production expenditure; and
  • make various threshold and integrity amendments across the three screen tax offsets.11

Enacted on 7 December 2021 as Act No. 127 of 2021

Location offset and producer offset: films commencing principal photography on or after 1 July 2021

PDV tax offset: films commencing post, digital and visual effects production on or after 1 July 2021

Loss carry back choice: technical amendment

Part 1 of Schedule 3 to the Treasury Laws Amendment (2021 Measures No. 5) Act 2021

Inserts s 160-16 into Div 160 of the ITAA 1997 to clarify the mechanism through which an entity may change its loss carry back choice.

A changed loss carry back choice applies as if it was always the entity’s choice. That is, it takes effect from the day the original choice was made.

Enacted on 7 December 2021 as Act No. 127 of 2021

(For further information, see page 7)

Amendment commences on 8 December 2021 and applies from the 2019–20 to the 2021–22 income years (will also apply to the
2022–23 income year once enabling legislation is enacted)

Alternative method for calculating tax free and taxable components of certain superannuation benefits for veterans

ATO legislative instrument MS 2022/1

Provides that certain superannuation benefits paid to veterans from particular schemes may be taxed as superannuation lump sums as rather than superannuation income streams.

The alternative method specified in this instrument requires each superannuation benefit paid under the pension to be taken to have the same tax free component and taxable component proportions to the superannuation interest that supports the pension.

Instrument registered on 4 January 2022

In effect, the alternative method will result in a tax free component proportion for a superannuation benefit (that is a superannuation lump sum payment following the Douglas12 decision) that is the same as it would have been if it was a superannuation income stream benefit payment (as it was treated prior to the Douglas decision).

Applies to certain superannuation benefits that are superannuation lump sums paid during the
2021–22 financial year from pensions paid under certain defence force benefit schemes

Tax depreciation incentive Acts

Details of enacted Act

Start date

Instant asset
write-off

Schedule 1 to the Coronavirus Economic Response Package Omnibus Act 2020

  • Increases the cost threshold below which small business entities can access an immediate deduction for depreciating assets and certain related expenditure from $30,000 to $150,000.
  • Allows entities with an aggregated turnover of $10 million or more but less than $500 million
    (up from the existing cap of $50 million) to access the IAWO.
  • Makes the IAWO available for depreciating assets and certain related expenditure costing less than $150,000.

Enacted on 24 March 2020 as Act No. 22 of 2020

12 March 2020 to 30 June 202013

 

Backing business investment incentive

Schedule 2 to the Coronavirus Economic Response Package Omnibus Act 2020

Allows businesses with aggregated turnovers of less than $500 million to deduct capital allowances for depreciating assets at an accelerated rate (50% in the first year).

Enacted on 24 March 2020 as Act No. 22 of 2020

12 March 2020 to 30 June 2021

 

Extending the instant asset write-off

Schedule 4 to the Treasury Laws Amendment (2020 Measures No. 3) Act 2020

Allows businesses with an aggregated turnover of less than $500 million to immediately deduct the cost of a depreciating asset where the asset is purchased for less than $150,000 and is first used or installed ready for use for a taxable purpose by 31 December 2020.

This extends the $150,000 IAWO by six months which otherwise would have ended on 30 June 2020.

Enacted on 19 June 2020 as Act No. 61 of 2020

1 July 2020 to 31 December 2020

Temporary full expensing of depreciating assets

Schedule 7 to the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020

Allows businesses with an aggregated turnover of less than $5 billion to deduct the full cost of eligible depreciating assets (including improvements to these assets).

Enacted on 14 October 2020 as Act No. 92 of 2020

Depreciating assets first held, and first used or installed ready for use, for a taxable purpose at or after 7:30pm on 6 October 2020 to 30 June 202214

Temporary full expensing of depreciating assets — amendments

Schedule 1 to the Treasury Laws Amendment (2020 Measures No. 6) Act 2020

Amends the temporary full expensing and backing business investment provisions in the income tax law to provide greater flexibility for entities to access the concessions by:

  • providing an alternative mechanism15 to the existing test for working out if the $5 billion threshold applies to qualify for temporary full expensing; and
  • allowing entities to opt out of temporary full expensing and the backing business investment incentives on an asset-by-asset basis.

Schedule 1 to the Bill also clarifies the intended operation of temporary full expensing by ensuring a balancing adjustment event occurs if a depreciating asset has its decline in value worked out under the temporary full expensing provisions and, in a later income year, the asset no longer meets the test regarding its use or its location in Australia.

Enacted on 17 December 2020 as Act No. 141 of 2020

1 January 202116

Temporary full expensing of depreciating assets: technical amendment

Part 1 of Schedule 3 to the Treasury Laws Amendment (2021 Measures No. 5) Act 2021

Amends s 40-157 of the IT(TP)A to clarify that, in working out the cost of a depreciating asset that is capital works for the purpose of calculating an entity’s total cost of investment for the 2016–17 to 2018–19 income years, ss 40-45 and 40-215 of the ITAA 1997 are disregarded.

This clarification ensures the investment test17 interacts appropriately with the existing provisions in Div 40 of the ITAA 1997.

The amendment applies to taxpayers who rely on ss 40-160 and 40-170 of the IT(TP)A when working out the decline in value of an asset at or after ‘2020 budget time’ (consistent with the temporary full expensing regime).

Enacted on 7 December 2021 as Act No. 127 of 2021

(For further information, see page 17)

Amendment commences on 8 December 2021 and applies from the 2020–21 to the 2021–22 income years (will also apply to the 2022–23 income year)

Low pool value

Division 9 of Part 2 of Schedule 3 to the Treasury Laws Amendment (2021 Measures No. 5) Act 2021

Amends s 328-180(6) of the IT(TP)A to correct a typographical error and ensure the law refers to ‘low pool value’ (rather than ‘low value pool’).18

Enacted on 7 December 2021 as Act No. 127 of 2021

1 January 2021

Bills before Parliament

*Status of Bill at adjournment of Parliament on 2 December 2021

Measure

Details of Bill before Parliament

Start date

Ending JobKeeper profiteering

This Private Member’s Bill19 the Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill 2021, proposes to amend the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 to:

  • delay the ability of certain entities to claim any GST input credits for 10 years, or until they pay the amount of JobKeeper they received equal to the amount of profits made and/or executive bonuses paid during the financial year period in which they received the JobKeeper payment. These entities do not include businesses with an annual turnover of less than $50 million; and
  • require the ATO to publish a list of all entities in receipt of JobKeeper payments, and how much they received, excluding those with an annual turnover of less than $50 million.

On 24 June 2021, the Bill was referred to the Senate Economics Legislation Committee for inquiry and report by 15 October 2021 (see page 38).

* Before the Senate20

The day after the enabling legislation receives Royal Assent

Sharing economy reporting regime

Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 7) Bill 2021

Proposes to amend s 396-55 of Schedule 1 to the TAA to require electronic platform operators to provide information on transactions made through the platform to the ATO.

This measure implements a recommendation of the report of the Black Economy Taskforce.

* Before the Senate21

Transactions in relation to the supply of taxi travel and
short-term accommodation: from 1 July 2022

For all other transactions:
from 1 July 2023

Removing the self-education expenses threshold

Schedule 3 to the Treasury Laws Amendment (2021 Measures No. 7) Bill 2021

Proposes to repeal s 82A of the ITAA 1936 and makes consequential amendments to remove the $250
non-deductible threshold for work-related self-education expenses.

* Before the Senate21

2022–23 and later income years

Consequential amendments to the FBTAA will apply to the FBT year starting on 1 April 2023 and to later FBT years

Removing the monthly minimum salary or wages threshold to count towards the SG

 

Schedule 1 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021

Proposes to amend s 27 of the SGAA to remove the $450 per month income threshold before an employee’s salary or wages count towards the Superannuation Guarantee (SG).

This will expand the superannuation guarantee to cover employees who earn less than $450 of salary or wages in a calendar month from a single employer.

* Before the House of Representatives22

The later of:

  • 1 July 2022; or
  • the first day of the next quarter after the Bill receives Royal Assent

FHSSS maximum releasable amount

Schedule 2 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021

Proposes to amend s 138-35 to Schedule 1 of the TAA to increase the total limit on the maximum amount of voluntary concessional and non-concessional contributions made from 1 July 2017 that are eligible to be released and used under the First Home Super Saver Scheme (FHSSS) from $30,000 to $50,000.

* Before the House of Representatives22

1 July 2022

Downsizer contributions

Schedule 3 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021

Proposes to amend s 292-102 of the ITAA 1997 to allow individuals aged 60 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their home.

* Before the House of Representatives22

1 July 2022

Work test reforms for superannuation contributions

Schedule 4 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021

Proposes to amend ss 290-165 and 292-85 of the ITAA 1997 to apply the work test to individuals aged between 67 to 75 years who claim a deduction for personal superannuation contributions.

This change facilitates the repeal of the existing work test that applies to non-concessional and salary sacrifice contributions.

Schedule 4 to the Bill also amends the ITAA 1997
to allow such individuals to make or receive
non-concessional contributions under the bring
forward rule.

* Before the House of Representatives22

1 July 2022

Segregated current pension assets

Schedule 5 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021

Proposes to amend the ITAA 1997 to allow superannuation trustees to choose their preferred method of calculating exempt current pension income (ECPI) when they have member interests in both accumulation and retirement phases for part, but not all, of the income year.

* Before the House of Representatives22

2021–22 and later income years

 

Extension of temporary full expensing of depreciating assets

Schedule 6 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021

Proposes to amend Subdiv 40-BB and ss 328-180 and 328-181 of the IT(TP)A to extend the temporary full expensing regime by 12 months, until 30 June 2023, to provide eligible businesses with additional time to access this measure.

* Before the House of Representatives22

Eligible assets acquired from 7:30pm (AEDT) on 6 October 2020 and first used or installed ready for use by 30 June 2023

Corporate collective investment vehicles: tax framework

Schedule 5 to the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021

Proposes to amend the income tax law by inserting new Subdiv 195-C into the ITAA 1997 to specify the tax treatment for the newly established CCIV.

The amendments give effect to the core CCIV tax framework to ensure that the CCIV is taxed on a
flow-through basis, with the objective that the general tax treatment of CCIVs and their members align with the existing tax treatment of AMITs and their members.

Draft regulations and rules were released on 21 December 2021 that implement key elements of the CCIV regulatory framework.

* Before the House of Representatives23

1 July 2022

Extension of temporary loss carry back

Schedule 6 to the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021

Amends the ITAA 1997 to extend the loss carry back rules by 12 months, allowing eligible corporate tax entities to also claim a loss carry back tax offset in the 2022–23 income year.24

The extension will allow eligible companies to carry back (utilise) tax losses from the 2022–23 income year to offset previously taxed profits as far back as the 2018-19 income year when they lodge their 2023 tax return.

Companies with aggregated turnover of less than $5 billion are eligible for temporary loss carry-back.25

Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.

* Before the House of Representatives23

Losses from 2019–20 to 2022–23 can be carried back against taxed profits from 2018–19 to 2021–22

A loss carry back tax offset can be claimed in the 2021, 2022 or 2023 company income tax return

Retirement income covenant

Schedule 9 to the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021

Proposes to amend the SISA to insert a new covenant (new s 52(8A)) that aims to ensure trustees maximise the expected retirement income of beneficiaries.

This covenant does not apply to trustees of
self-managed superannuation funds (SMSFs).

* Before the House of Representatives23

1 July 2022

ESS: removing cessation of employment as a taxing point

Schedule 10 to the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021

Proposes to amend the ITAA 1997 to remove cessation of employment as a taxing point for employee share scheme (ESS) interests which are subject to deferred taxation.

* Before the House of Representatives23

Expected to be 1 July 202226

Exposure draft legislation

At the time of writing, exposure draft legislation had been released for comment for the measures in the table below. They had not been introduced as Bills before Parliament.

Measure

Details of exposure draft Bill

Start date

Reforms to reporting and transparency of the charity sector

An exposure draft of the Australian Charities and Not-for-profits Commission Amendment (2021 Measures No. 3) Regulations 2021 was released on 20 September 2021.

The draft Bill proposes to implement two reforms to reduce red tape for, and increase transparency of, the charity sector. The reforms arise from the Government’s agreement to recommendations in the Australian Charities and Not-for-profits Commission Legislation Review 2018.

The draft Bill proposes to make the following amendments:

  • Increase the revenue thresholds defining small, medium and large registered charities.27
  • Require all registered charities to disclose related party transactions, with small registered charities to make a simplified disclosure involving a brief description of related party transactions.
  • Provide an exemption for medium registered charities and large registered charities with only one remunerated key management person from the requirement to disclose, as part of their related party transactions, aggregate remuneration paid to responsible persons and senior executives.

Regulations increasing the annual revenue thresholds apply from the 2021–22 financial year28

Changes to related party disclosures apply from the 2022–23 financial year29

 

Working Holiday Makers and Seasonal Labour Mobility Program

Exposure drafts of the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Miscellaneous and Technical Amendments No. 2 and Treasury Laws Amendment (Measures for Consultation) Regulations 2021: Miscellaneous and Technical Amendments No. 2 were released on 24 September 2021.

The draft Bill and draft regulations seek to ensure the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes in laws under the Treasury’s portfolio.

The draft Bill and draft regulations include the following proposed changes to tax laws:

  • Amends s 3A of the ITRA to ensure the Working Holiday Maker (WHM) tax regime functions properly despite disruptions caused by
    COVID-19.
  • Amends the income tax laws to ensure the Seasonal Labour Mobility Program tax regime functions properly despite disruptions caused by COVID-19.

Changes impacting WHMs will apply:

  • retrospectively to non-residents from 1 July 2021;
  • prospectively from the first 1 July after
    the enabling legislation is enacted

Changes to the Seasonal Labour Mobility Program will apply from 1 July 2019

FBT exemption for income tax exempt not-for-profit private health insurers

An exposure draft of the Treasury Laws Amendment (Measures for  Consultation) Bill 2021: Minor and technical amendments Autumn 2022 was released on 2 December 2021.

Schedule 1 to the draft Bill proposes to amend s 57A of the FBTAA to fix an unintended outcome affecting income tax exempt not-for-profit private health insurers operating hospitals that inadvertently excluded them from accessing the exemption in respect of their hospital employees.

Retrospectively to the 2017–18 FBT year and later FBT years

Minor superannuation amendments

An exposure draft of the Treasury Laws Amendment (Measures for Consultation) Regulations 2021: Miscellaneous and Technical Amendments Autumn 2022 was released on 2 December 2021.

The draft regulations seek to ensure the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes in laws under the Treasury’s portfolio.

Further, the draft regulations propose to amend Income Tax Assessment (1997 Act) Regulations 2021, Superannuation Industry (Supervision) Regulations 1994 and Retirement Savings Accounts Regulations 1997 to address unintended outcomes arising from the inability of recipients of certain non-capped defined benefit income streams (that were commenced on or after 1 July 2017) to address excess transfer balance amounts through commutations.

Schedule 1 of the Regulations commences the day after the regulations are registered

Self-assessment of intangible asset depreciation

Exposure draft to the Treasury Laws Amendment (Measures For Consultation) Bill 2021: Intangible Asset Depreciation was released on 3 December 2021.

The draft Bill proposes to amend the tax law to allow taxpayers to choose whether to self-assess the effective life of eligible depreciating intangible assets or to continue to use the tax effective life set by the statute.30

Will allow taxpayers to self-assess the tax effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and in-house software.

Assets acquired from 1 July 2023, after the temporary expensing measure has concluded

Discussion papers

Measure

Details of discussion paper

Start date

Early access to superannuation for crime victims

Consultation Paper released on 27 May 2018 which sets out a proposal to allow victims of certain crimes, such as serious violent crimes, with unpaid or partially paid compensation orders to access money held in their perpetrator’s superannuation to pay the outstanding compensation.

Announced on 17 December 2018 as part of the
Mid-Year Economic and Fiscal Outlook 2018–19.

12 months after the date the enabling legislation receives Royal Assent

3-year audit cycle for some SMSFs

Consultation Paper released on 6 July 2018 which sets out a proposal to change the annual audit requirement for SMSFs to a 3-yearly requirement for SMSFs with a good compliance history and no prescribed ‘events’.

1 July 2019

ABN reforms

Consultation Paper released on 20 July 2018 which sets out a proposal to strengthen and modernise the ABN system.

To be advised

Early release of superannuation

Treasury review of current rules governing early release of superannuation on compassionate grounds and in cases of severe financial hardship.

Consultation Paper released on 19 December 2017

Consultation Paper released on 20 November 2018

To be advised

Licensing an individual’s fame or image

Consultation paper released on 13 December 2018 which sets out a proposal to amend the tax law to include all remuneration, including payments and
non-cash benefits, provided for the commercial exploitation of a person’s fame or image in that individual’s assessable income.

(see also ATO advice under development on page 41)

1 July 2019

Division 7A

Proposed reforms to improve the integrity and operation of Div 7A of Part III of the ITAA 1936.

Relevant dates:

  • 18 May 2012   Assistant Treasurer (Labor) commissioned a review by the Board
    of Taxation (the Board)
  • 12 Nov 2014    Final report provided by the Board to the Government
  • 4 Jun 2015      Board’s final report released by Treasury — 15 recommendations to reform Div 7A
  • 3 May 2016     Budget announcement — proposed reforms to commence from 1 July 2018
  • 8 May 2018     Budget announcement — defer reforms to 1 July 2019
  • 22 Oct 2018    Release of Treasury Consultation paper
  • 2 Apr 2019      Budget announcement — defer reforms to 1 July 2020
  • 30 Jun 2020    Announcement — proposed reforms to apply to income years commencing on or after the date the enabling legislation receives Royal Assent

Income years commencing on or after the date the enabling legislation receives Royal Assent

Education and training expense deductions for individuals

Discussion Paper released on 11 December 2020 which sets out a proposal to allow individuals to deduct education and training expenses they incur, where the expense is not related to their current employment.

Announced on 2 October 2020.

2 October 2020

Patent box

Discussion Paper released on 5 July 2021 which sets out the proposed new patent box regime to further encourage innovation in Australia. The measure was announced in the Federal Budget 2021–22.

Under the proposed regime, an effective concessional tax rate of 17% for companies would apply to eligible profits from eligible patented inventions applied for after 11 May 2021. The patent box regime would target new patented inventions related to the medical and biotechnology sectors.

1 July 2022

Announcements

Measure

Details of announcement

Start date

Removing the capital gains discount at the trust level for MITs and AMITs

Announced on 8 May 2018 as part of the Federal Budget 2018–19.

Prevents MITs and AMITs from applying the 50% capital gains discount at the trust level.

Income years commencing on or after 3 months after the date the enabling legislation receives Royal Assent31

ABN system reforms

Announced on 2 April 2019 as part of the Federal Budget 2019–2032

Requires ABN holders:

  • with an income tax return obligation to lodge their income tax return; and
  • to annually re-confirm their details on the Australian Business Register.

The ATO is conducting a targeted consultation to work in partnership with key stakeholders to explore and
co-design solutions for the administrative approach to strengthening the ABN system to disrupt black economy behaviour.



 

1 July 2021

1 July 2022

Reducing the compliance burden of FBT record keeping

Announced on 6 October 2020 as part of the Federal Budget 2020–21.

Will allow employers to rely on existing corporate records, rather than employee declarations and other prescribed records, to finalise their FBT returns.

The ATO is conducting a targeted consultation to understand the existing corporate records for FBT that employers hold, to prepare for the proposed legislative change that Treasury is working through.

1 April of the FBT year after the date the enabling legislation receives Royal Assent

Corporate tax residency

Announced on 6 October 2020 as part of the Federal Budget 2020–21.

Adopted the key recommendation of the Board and will amend the law to provide that a company that is incorporated offshore will be treated as an Australian resident for tax purposes if it has a ‘significant economic connection to Australia’.

First income year after the date the enabling legislation receives Royal Assent (with option to retrospectively apply the new law from 15 March 2017)

ATO debt recovery action for small businesses

Announced on 11 May 2021 as part of the Federal Budget 2021–22.

Will extend the power of the AAT to pause or modify ATO debt recovery action in relation to disputed debts that are being reviewed by the Small Business Taxation Division of the AAT.

Date the enabling legislation receives Royal Assent

Corporate tax residency — trusts and corporate limited partnerships

Announced on 11 May 2021 as part of the Federal Budget 2021–22.

Will consult on broadening the amendments to the corporate tax residency rules to include trusts and corporate limited partnerships which are subject to
their own separate but similar residency tests.

Part of consultation on corporate tax residency test amendments announced in Federal Budget 2020–21

Digital games tax offset

Announced on 11 May 2021 as part of the Federal Budget 2021–22.

Will introduce a 30% refundable DGTO, for eligible businesses that spend a minimum of $500,000 on qualifying Australian games expenditure.

The maximum DGTO that a developer will be able to claim in each year is $20 million.

1 July 2022

Individual tax residency rules

Announced on 11 May 2021 as part of the Federal Budget 2021–22.

Will replace the individual tax residency rules with a new, modernised framework comprising:

  • a primary test — under this simple ‘bright line’ test, a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident; and
  • a secondary test (i.e. a factor test) — for individuals who do not meet the primary test. A person will be an Australian tax resident if they satisfy any two of the four factors, including physical presence and measurable, objective criteria.

First income year after the enabling legislation receives Royal Assent

SMSFs — relaxing residency requirements

Announced on 11 May 2021 as part of the Federal Budget 2021–22.

Will relax residency requirements for SMSFs and small APRA-regulated funds by:

  • extending the central control and management test safe harbour from 2 to 5 years for SMSFs; and
  • removing the active member test for both fund types.

This measure will allow SMSF and small APRA-regulated fund members to continue to contribute to their superannuation fund while temporarily overseas.

Start of the first financial year after the enabling legislation receives Royal Assent33

SMSFs — legacy retirement product conversions

Announced on 11 May 2021 as part of the Federal Budget 2021–22.

Will allow individuals to exit a specified range of legacy retirement products, together with any associated reserves, for a two-year period.

This will enable the conversion of market-linked,
life-expectancy and lifetime products into an
account-based pension.

First financial year after the enabling legislation receives Royal Assent

Expanding Australia’s tax treaty network

Announced on 15 September 2021

The Government plans to enter into 10 new and updated tax treaties by 2023, building on Australia’s existing network of 45 bilateral tax treaties.

The planned expansion of Australia’s tax treaty network will cover 80% of foreign investment in Australia and about $6.3 trillion of Australia’s two-way trade and investment.

Negotiations with India, Luxembourg and Iceland are occurring this year as part of the first phase of the program. Negotiations with Greece, Portugal and Slovenia are scheduled to occur in 2022 as part of the second phase.

Various

Transforming Australia’s Payments System

Announced on 8 December 2021

The Treasurer, the Hon Josh Frydenberg, announced broad reforms to Australia’s regulation of payment system, including regulatory frameworks to govern the licensing of digital currency exchanges and the conduct of business that hold digital currencies on behalf of other entities.

The Board has been asked to advise the government on an appropriate tax treatment of digital currency assets and transactions. The Board’s work will be based on recommendations made by the Senate’s Select Committee on Australia as a Technology and Financial Centre in its Final Report published in October 2021.34

The consultation process is expected to continue to the end of 2022

Board of Taxation reviews

Review

Details of Board of Taxation review

Status of review

Review of low value imported goods

On 5 July 2021, the Minister for Housing and Assistant Treasurer, Michael Sukkar, announced that the Board would undertake a review of the collection of GST on low value imported goods and ensure the system is operating as intended.

The Board was asked to report back to the Government by 17 December 2021.

Terms of Reference

Current

Review of CGT roll-overs

On 12 December 2019, the Minister for Housing and Assistant Treasurer, Michael Sukkar, announced that the Board would undertake a review of the CGT
roll-over rules.

In February 2020, the Board released a Consultation Guide.35

The Board had been asked to report to Government by 30 November 2020. However, the initial consultation period was extended in response to the COVID-19 pandemic.

The Board released a second Consultation Paper for stakeholder review in December 2020.36

The Board provided interim written advice to the Government on 25 March 2021 and will submit a final report by 22 April 2022.

Terms of Reference

Current

Final Report to be delivered to the Government by 22 April 2022

R&D Tax Incentive — Review of the dual-agency administration model

On 11 May 2021, as part of the Federal Budget
2021–22, the Government announced that the Board would undertake a review to evaluate the dual-agency37 administration model for the R&DTI.

The Board has been requested to evaluate the R&DTI dual-agency administration model, with a view to identifying opportunities to reduce duplication between the two administrators, simplify administrative processes, or otherwise reduce the compliance costs for applicants.

The Government had asked the Board to review the administrative framework of the R&DTI before the end of 2021.

Terms of Reference

Current

Inspector-General of Taxation reviews

Review

Details of IGTO review

Status

Effectiveness
of ATO communications of taxpayers’ rights to complain, review and appeal

Title of review: An Investigation into the effectiveness of ATO communications of taxpayers’ rights to complain, review and appeal

The purpose of this IGTO investigation is to confirm how effectively (clearly and completely) the ATO communicates appropriate information to taxpayers and their representatives on the taxpayers’ rights to review, complain and appeal decisions made and actions taken by the ATO.

Final Report

ATO Response

Terms of Reference

Completed

Final Report released on 14 October 2021

The ATO’s administration and management of objections

Title of review: The ATO’s Administration and Management of Objections

This IGTO investigation will focus mainly on the timeliness in issuing objection decisions, the independence of objection decision makers and the objection decision making process, as well as the interaction between objections processes and other initiatives in minimising or narrowing disputes.

Terms of Reference

Current

Final Report to be delivered in 2022

The ATO’s exercise of its general power of administration

Title of review: The Exercise of the General Powers of Administration

This IGTO investigation seeks to evaluate the ATO’s use of its general powers of administration granted by tax laws. The IGTO’s review will draw from case studies in its complaints investigation service as well as stakeholder submissions to identify and investigate particular areas raised as examples of exercise of the ATO’s general power of administration that should be investigated.

In particular, the IGTO is interested in understanding how broad-based decisions (i.e., those affecting large groups of taxpayers) are identified and determined. As there are limited avenues for taxpayers and tax practitioners to challenge the exercise of the ATO’s general powers of authority, it is important to ensure that processes and procedures underpinning these decisions are robust and effective.

Terms of Reference

Current

Final Report to be delivered in 2022

Exercise of the Commissioner’s remedial power

Title of review: The Exercise of the Commissioner’s Remedial Power

This IGTO investigation aims to assess how issues are raised for the use of the Commissioner’s remedial power and whether the processes underlying consideration of these matters are sufficiently robust to take into account consideration of relevant factors and expert stakeholder views. This IGTO investigation was prompted by an apparent lack of clarity in these processes. This is important as decisions of the Commissioner in relation to its remedial power are not subject to external merits or judicial review.

Terms of Reference

Current

Final Report to be delivered in 2022

Australian National Audit Office performance audits

Audit

Details of ANAO performance audit

Status

Addressing Superannuation Guarantee non-compliance

Audit conducted by the ANAO to assess the effectiveness of the ATO’s activities in addressing superannuation guarantee non-compliance.

The ANAO will examine the following questions:

  • Does the ATO have an effective risk-based superannuation guarantee compliance framework?
  • Are the ATO’s compliance activities effective in achieving greater employer compliance with their superannuation guarantee obligations?

Current

Announced on 26 November 2021

Final report to
be tabled by 22 February 2022

Administration of the JobKeeper Scheme

Audit conducted by the ANAO to assess the effectiveness of the ATO’s administration of the JobKeeper scheme.

The ANAO will examine the following questions:

  • Has the ATO effectively administered the rules for the JobKeeper scheme?
  • Has the ATO implemented effective measures to protect the integrity of JobKeeper payments?
  • Has the ATO effectively monitored and reported on the operational performance of the scheme?

Current

Final report to be tabled in March 2022

ATO’s engagement with tax agents

Audit conducted by the ANAO to assess the effectiveness of the ATO’s engagement with tax agents in achieving efficient and effective tax and superannuation systems.

The ANAO will examine the following questions:

  • Did the ATO have an effective strategy for engaging with tax agents?
  • Did the ATO provide effective services and support for tax agents?

Current

Final report to be tabled in August 2022

Other Government reviews

Review

Details of Government review

Status

Venture Capital Tax Concessions Program

Review of the venture capital tax concessions program to ensure the current measures supports genuine
early-stage start-ups and achieves key policy objectives in the venture capital sector.

Terms of Reference

Current

Announced on 7 July 2021

Final report to be delivered to the Government at the end of 2021

Parliamentary Committee reviews

Review

Details of Parliamentary Committee review

Status

Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill 2021

On 24 June 2021, the Senate referred the Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill 2021 to the Senate Economics Legislation Committee.

Review home page

The Private Member’s38 Bill was referred to the Committee to provide an opportunity for consideration of the specifics of the Bill and assess the implications of its passage through the Parliament.

(For further information, see page 19)

Completed

Final Report delivered to the Government on 15 October 2021 and released in October 2021

Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 [Provisions]

On 2 December 2021, the Senate referred the provisions of the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 to the Senate Economics Legislation Committee.

Review home page

The Bill was referred so the Committee can consider the economy-wide impacts of Schedules 1-5 to the Bill, multinational tax evasion issues, the retirement income covenant, and tax evasion issues arising from employee share schemes.

Current

Final Report due to be delivered to the Government by 3 February 2022

The performance and integrity of Australia’s administrative review system

On 20 October 2021, the Senate referred an inquiry into the performance and integrity of Australia’s administrative review system to the Legal and Constitutional Affairs References Committee for inquiry.

Review home page

Terms of Reference

Current

Final Report due to be delivered to the Government by 31 March 202

Key ATO legislative guidance

The following table sets out notable final, draft and proposed ATO guidance on the operation of some recent legislative amendments and key legislative provisions. The ATO’s advice under development webpage contains further information.

Final guidance

Measure

Details

Superannuation funds: NALI

 

Final Law Companion Ruling LCR 2021/2 sets out the Commissioner’s view of amendments in Schedule 2 to the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Act 2019, concerning the application of the non-arm’s length income (NALI) provisions where a trustee incurs ‘non-arm’s length expenditure’ under a scheme.

Date of effect of legislative amendments: 1 July 2018

Temporary full expensing

Final Law Companion Ruling, LCR 2021/3 Temporary full expensing, provides guidance in relation to the provisions for temporary full expensing of depreciating assets introduced by the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 and the Treasury Laws Amendment (2020 Measures No.6) Act 2020.

Date of effect of legislative amendments: 6 October 2020

Allocation of professional firm profits

Final Practical Compliance Guideline, PCG 2021/4, Allocation of professional firm profits – ATO compliance approach, sets out the ATO's compliance approach to the allocation of profits or income from professional firms in the assessable income of the practitioner.

Date of commencement of ATO approach: 1 July 2022

Draft guidance

Measure

Details

Limiting deductions for expenses for holding vacant land

Draft Taxation Ruling TR 2021/D5 provides preliminary guidance in relation to the application of s 26-102 of the ITAA 1997, which was inserted by Schedule 3 to the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019.

Date of effect of legislative amendments: 1 July 2019

Expected completion: February 2022

Section 100A reimbursement agreements

This draft Taxation Ruling will set out the Commissioner’s preliminary views on the exclusions from a ‘reimbursement agreement’ for:

  • agreements not entered into with a purpose of eliminating or reducing someone’s income tax; and
  • agreements entered into in the course of ordinary family or commercial dealings.

The draft Ruling is expected to be released in conjunction with the Div 7A item below.

Expected completion: February 2022

UPEs of private company beneficiaries (Div 7A)

This draft Taxation Determination will set out the Commissioner’s proposed view on when the unpaid present entitlement (UPE) of a private company beneficiary will be treated as a loan for which there can be dividend consequences under Div 7A of Part III of the ITAA 1936, as that beneficiary has provided ‘any other form of financial accommodation’ to the trustee.

The draft Determination will be the product of a review of existing guidance in Taxation Ruling TR 2010/3 Income tax: Division 7A loans: trust entitlements and Law Administration Practice Statement PS LA 2010/4 Division 7A: trust entitlements.

To the extent that any view in this draft Determination is different to that existing guidance, the view in the draft Determination will be prospective and will apply to present entitlements created on, or after, 1 July 2022. That existing guidance will continue to apply to current arrangements.

Expected completion: February 2022

PSI — meaning of personal services business

Draft Taxation Ruling TR 2021/D2 provides preliminary guidance on the meaning of personal services income (PSI) and what is a personal services business.

The final Ruling will provide a consolidation of TR 2001/7 Income tax: the meaning of personal services income and TR 2001/8 Income tax: what is a personal services business.

Expected completion: February 2022

Residency tests for individuals

This draft Taxation Ruling will provide the Commissioner’s proposed guidance to individuals to enable them to self-assess their residency status.

Expected completion: February 2022

Use of an individual’s image

This draft Taxation Determination will set out the Commissioner’s proposed view on how s 6-5 of the ITAA 1997 applies to arrangements where an individual with fame establishes a connected entity and enters into an agreement with that entity granting it
non-exclusive use of their name, image, likeness, identity, reputation and signature.

This draft Determination will update the view previously expressed in draft Practical Compliance Guideline PCG 2017/D11, which was withdrawn on 24 August 2018.

Expected completion: To be advised

(See also Treasury Consultation paper released on 13 December 2018 in relation to the proposed legislative amendment on page 27)

Useful ATO links

The following table sets out some useful links to ATO webpages which contain resources and useful information on the status of ATO guidance.

Resource

Details

Advice under development program

The ATO develops public advice and guidance to assist taxpayers to understand their obligations and be aware of their rights and entitlements.

Key matters on which the ATO is currently considering providing advice and guidance are grouped by topic. This content is updated regularly.

Forms and instructions

A range of forms and instructions to assist with tax time.

Key super rates and thresholds

Key super rates and thresholds sets out a range of useful rates and thresholds that apply to contributions and benefits, employment termination payments, superannuation guarantee and co-contributions.

Matters under consultation

Key matters on which the ATO is currently consulting are grouped by segment of the market. This content is updated regularly.

Media Centre

The ATO’s Media Centre contains media releases, speeches, articles, videos and other useful content.

Occupation and industry specific guides

A range of guides for specific industries and occupations to help taxpayers to correctly report their income and allowances, and claim deductions for the work-related expenses they are entitled to.

Small business newsroom

The Small business newsroom contains a suite of resources for small businesses to keep up to date with the latest news, keep track of key dates and access quick links to other resources.

Tax professionals newsroom

The Tax professionals newsroom allows tax professionals to keep up to date with the latest news.

Tax Time 2021

A suite of resources including an overview of key changes, how to prepare for tax time and key tax time messages from the Tax Practitioners Stewardship Group.

Downloadable PDF publications are available from the ATO Publication Ordering Service.

Tax Time Toolkit

A suite of downloadable PDF publications is available here.

COVID-19 stimulus measures — end dates

The following table sets out the dates on which the 2020 COVID-19 economic stimulus measures concluded.

Measure

Conclusion of program

Early access to superannuation

31 December 2020

Temporary Coronavirus Supplement for those on income support

$250 per fortnight from 25 September 2020 until 31 December 2020

$150 per fortnight from 1 January 2021 until 31 March 2021

$150,000 instant asset write-off (aggregated turnover less than $500 million)

Must acquire asset by 31 December 2020, and first use or install the asset ready for use by 30 June 2021

(see page 16)

JobKeeper

Phase 1 of the Scheme ($1,500 per fortnight) commenced on 30 March 2020 until 27 September 2020

Phase 2 of the Scheme ($1,200/$75039 per fortnight) commenced on 28 September 2020 until 3 January 2021

Phase 3 of the Scheme ($1,000/$65039 per fortnight) commenced on 4 January 2021 until 28 March 2021

Temporary provisions in Fair Work Act relating to JobKeeper (i.e. JobKeeper enabling direction)

29 March 2021

HomeBuilder

For contracts signed between 4 June 2020 and 31 March 2021, construction needs to commence within 18 months (e.g. for a contract signed on 31 March 2021, construction would need to commence by 30 September 2022)40

Backing business investment (accelerated depreciation)

30 June 2021

(see page 16)

Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme

Phase 1 of the Scheme commenced on 23 March 2020 and closed for new loans on 30 September 2020

Phase 2 of the Scheme commenced on 1 October 2020 and was available for loans made by participating lenders until 30 June 2021

JobMaker Hiring Credit

6 October 2022

Loss carry back

Losses incurred up until 30 June 202341

(see page 23)

Temporary full expensing of depreciating assets

30 June 202342

JobMaker Hiring Credit program

The following table sets out key information relating to the JobMaker Hiring Credit program.

Details of enacted Act/Registered legislative instrument

Start date

Economic Recovery Package (JobMaker Hiring Credit) Amendment Act 2020

Enables the Treasurer to make rules to provide for a Coronavirus economic response payment in relation to the JobMaker Hiring Credit scheme.

Enacted on 13 November 2020 as Act No. 96 of 2020

CERP (Payments and Benefits) Amendment Rules (No. 9) 2020

Treasurer’s rules about JobMaker Hiring Credit

Registered on 4 December 2020 as Legislative Instrument F2020L01534

Operates from 7 October 2020 to 6 October 2022

 

Footnotes

1 Directors can apply for a director ID using their myGovID through the Australian Business Registry Services website.

2 On 6 October 2021, the ATO published guidance on its website setting out its approach to employers transitioning to STP Phase 2. It is mandatory from 1 January 2022 if your solution is ready. If your solution is ready and you can start Phase 2 reporting before 1 March 2022, you’ll be considered to be reporting on time and you won’t need to apply for more time. Deferrals are automatically available to clients of digital service providers who obtain deferrals. However, if you need more time to transition, you can apply for your own deferral.

3 This measure is currently legislated to end on 30 June 2022, however the Government announced on 11 May 2021 as part of the Federal Budget 2021–22 that the measure will be extended by 12 months to 30 June 2023. Under the proposed amendment, an eligible entity will be able to carry back a tax loss for the 2019–20, 2020–21, 2021–22 and 2022–23 income year and apply it against tax paid in the 2018–19, 2019–20, 2020–21 or 2021–22 income year, claiming the loss carry back tax offset in the 2021, 2022 or 2023 company income tax return. Amending legislation is currently before Parliament (see page 23 for details).

4 This Bill replaced the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 which was discharged on 9 November 2020. The measure was originally proposed to commence on 1 July 2019.

5 The entity must receive the payment in the 2020–21 financial year and have an aggregated turnover of less than $50 million. The Minister must, by legislative instrument, declare payments under the relevant State or Territory program to be treated as NANE income, and the program must have been publicly announced on or after 13 September 2020.

6 This measure was previously contained in Schedule 1 to the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019 which proposed to increase the maximum number of allowable members in SMSFs from four to six from 1 July 2019. However, that Bill was amended as it progressed through Parliament, and Schedule 1 was omitted in its entirety from that Bill before it was enacted.

7 For the payment to be NANE income, the entity must receive the payment in the 2020–21 financial year and have an aggregated turnover of less than $50 million. The Minister must, by legislative instrument, declare payments made under the relevant State or Territory program to be treated as NANE income, and the program must have been publicly announced on or after 13 September 2020.

8 The entity must receive the payment in the 2021–22 financial year and have an aggregated turnover of less than $50 million. The Minister must, by legislative instrument, declare payments made under the relevant Commonwealth program to be treated as NANE income.

9 Existing DGRs and existing DGR applicants will have an additional 12 months (and in some cases, four years) after that time before the amendments apply.

10 The producer offset is currently 20% across all types of eligible films that are not feature films.

11 The three tax offsets providing tax incentives for film, television and other screen production in Australia are the producer offset, the location offset and the post, digital and visual effects tax (PDV) offset.

12 In response to the Federal Court’s decision in Commissioner of Taxation v Douglas [2020] FCAFC 220, the Government announced on 24 November 2021 that it seeks to ensure that certain kinds of benefits paid to veterans are taxed as superannuation lump sums rather than superannuation income stream benefits. The Government also intends to preserve the preferential outcomes for those veterans benefitting from the Court’s decision by creating a new non-refundable tax offset for veterans receiving benefits under the affected schemes.

13 Schedule 4 to the Treasury Laws Amendment (2020 Measures No. 3) Act 2020 extended the $150,000 IAWO by six months to 31 December 2020 (see page 16).

14 This measure is currently legislated to end on 30 June 2022, however the Government announced on 11 May 2021 as part of the Federal Budget 2021–22, that the measure will be extended by 12 months to 30 June 2023. Refer to the amending legislation on page 22.

15 Under the investment test, the entity must have a minimum total cost of more than $100 million of depreciating assets for the 2016–17 to 2018–19 income years (combined).

16 While these amendments commence prospectively, they apply for a fixed period in relation to the
2019–20 and 2020–21 income years for the backing business investment provisions, and also for a fixed period for the 2020–21 and 2021–22 income years for the temporary full expensing measure: para 1.41 of the Explanatory Memorandum to the Bill.

17 A corporate tax entity that cannot meet the $5 billion aggregated turnover test may still be eligible for temporary full expensing if both of the following conditions in s 40-157 of the IT(TP)A are satisfied:

  • the entity’s total ordinary income and statutory income (excluding NANE income) is less than $5 billion for either the 2018–19 or 2019–20 income year (if that year ends on or before 6 October 2020); and
  • the total cost of certain depreciating assets (including cost of improvements) held and first used, or first installed ready for use, for a taxable purpose in the 2016–17, 2017–18 and 2018–19 income years (combined) exceeds $100 million.

18 ‘Low pool value’ in s 328-210 of the ITAA 1997 refers to the balance in a general small business pool that must be fully expensed. ‘Low-value pool’ in s 40-425 of the ITAA 1997 refers to a pool to which low
cost-assets (costing less than $1,000) can be allocated by entities that do not apply the small business simplified depreciation rules. This typographical error in the heading in s 328-180(6) of the IT(TP)A — a transitional provision relating to s 328-210 — was made in 2015 when the provision was inserted by Schedule 1 to the Tax Laws Amendment (Small Business Measures No. 2) Act 2015 (Act No. 67 of 2015). This error has been corrected by the amendment in the table above.

 A similar typographical error in s 328-181(5) of the IT(TP)A — also a transitional provision relating to s 328-210 — was made when that provision was inserted by the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 (Act No. 92 of 2020). This latter error was first identified by The Tax Institute and raised with Treasury in 2020. It has been corrected by Part 2 of Schedule 1 to the Treasury Laws Amendment (2020 Measures No. 6) Act 2020 (Act No. 141 of 2020).

19 A Private Member’s Bill is a Bill introduced into Parliament by a member of the House of Representatives or a senator who is not acting on behalf of the government. This Bill was introduced by Tasmanian Greens Senator Nick McKim.

20 Introduced into the Senate on 21 June 2021.

21 Introduced into the House of Representatives on 25 August 2021 and passed by the House on 18 October 2021. Introduced into the Senate on 19 October 2021.

22 Introduced into the House of Representatives on 27 October 2021.

23 Introduced into the House of Representatives on 25 November 2021.

24 Announced on 11 May 2021 as part of the Federal Budget 2021–22.

25 The loss carry back tax offset is limited by requiring that the amount carried back is not more than the tax paid on the earlier taxed profits and that the loss carry back does not generate a franking account deficit.

26 ESS interests for which the ESS deferred taxing point occurs on or after the beginning of the financial year starting after Royal Assent, or if this Bill receives Royal Assent on 1 July—to ESS interests for which the ESS deferred taxing point occurs on or after that 1 July.

27 The threshold for a small registered entity is proposed to be increased from less than $250,000 to less than $500,000; for a medium registered entity from $250,000 to less than $1 million to $500,000 to less than $3 million; and for a large registered entity from $1 million or more to $3 million or more.

28 Or the period substituted for the 2021–22 financial year for those entities with an approved substituted accounting period.

29 The proposed amendments apply to entities required to prepare a special purpose financial report disclosing the remuneration of key management personnel from the 2021–22 financial year (or the period substituted for the 2022–23 financial year for those entities with an approved substituted accounting period).

30 This measure was previously contained in Schedule 2 to the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017 which was introduced into Parliament on 30 March 2017. That Bill proposed to amend the income tax law to provide taxpayers with the choice to self-assess the effective life of certain intangible depreciating assets they start to hold on or after 1 July 2016, rather than using the statutory effective life currently specified in s 40-95(7) of the ITAA 1997.

On 5 December 2018, the Government’s amendment in the Senate to remove Schedule 2 from the Bill was agreed to by the Senate, and the Bill was enacted on 1 March 2019 without the measure affecting intangible assets proceeding.

31 Start date was deferred from 1 July 2019 to 1 July 2020, then the Government announced on 30 June 2020 that the start date is revised from 1 July 2020 to the income years commencing on or after three months after the date the enabling legislation receives Royal Assent.

32 This measure is currently under consultation by the ATO and due for completion in March 2022.

33 The Government expects this to have occurred before 1 July 2022.

34 These recommendations include:

  • Ensuring that digital asset transactions only give rise to a CGT event where they genuinely result in a clearly definable capital gain or loss;
  • Providing a 10% company tax discount to businesses undertaking digital asset ‘mining’ and related activities in Australia if they source their own renewable energy for these activities; and
  • Establishing a ‘Global Markets Incentive’ to replace the Offshore Banking Unit (OBU) regime by the end of 2022. Such a regime may include a 15% tax on eligible activities that the Government wishes to incentivise. The OBU regime has been closed to new entrants from 14 September 2021, with concessional tax treatment removed from 2023–24.

35 The Tax Institute made a submission in response to this consultation paper on 7 July 2020.

36 The Tax Institute made a submission in response to this consultation paper on 12 February 2021.

37 Dual-agency refers to the joint administration of the R&DTI by the ATO and Industry Innovation and Science Australia (IISA) and the Department of Industry, Science, Energy and Resources (DISER), with the ATO being responsible for the administration and processing of R&D tax offset claims, and IISA responsible for registering companies' R&D activities.

38 A Private Member’s Bill is a Bill introduced into Parliament by a member of the House of Representatives or a senator who is not acting on behalf of the government. This Bill was introduced on 21 June 2021 by Tasmanian Greens Senator Nick McKim.

39 Based on hours worked by the individual in the reference period.

40 On 29 November 2020, the Government announced a six-month extension to the HomeBuilder program (from 31 December 2020) to 31 March 2021. On 17 April 2021, the Government announced that the construction commencement requirement will be extended from six months to 18 months for all existing applicants. This will provide an additional 12 months to commence construction from the date on which the building contract was signed. Applications for HomeBuilder closed at midnight on 14 April 2021.

41  Subject to legislative amendment to give effect to the Government’s announcement on 11 May 2021, as part of the Federal Budget 2021–22, to extend the measure by 12 months. Losses incurred up to 30 June 2023 will be able to be carried back as far to the year ended 30 June 2019 with eligibility being limited to corporate taxpayers with an aggregated turnover of less than $5 billion. See page 23 for the amending bill.

42 This measure is currently legislated to end on 30 June 2022, however the Government announced on 11 May 2021 as part of the Federal Budget 2021–22 that the measure will be extended by 12 months to 30 June 2023. See page 22 for the amending bill.

 

DISCLAIMER: The material and opinions in this article should not be used or treated as professional advice and readers should rely on their own enquiries in making any decisions concerning their own interests.