Tax administration

State of Tax Policy Report: May 2022

Written by The Tax Institute’s Tax Policy and Advocacy Team

   

The State of Tax Policy Report: April 2022 (SOTP Report) sets out the status of the key tax and superannuation legislative measures, following the dissolution of the 46th Parliament ahead of the Federal election to be held on 21 May 2022.

The Tax Institute’s Tax Policy and Advocacy (TPA) team prepare this Report periodically to assist our members in keeping track of the extensive list of enacted, and announced but unenacted, measures.

Each edition of the SOTP Report is updated to reflect the most current developments, and a number of measures reported in previous SOTP Reports are removed to contain the length of the Report.  These previously reported measures can be found in earlier editions of this Report, which are available in your member portal.

 

Notes

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 (recently ended term of) Parliament, that commenced on 2 July 2019. The House of Representatives adjourned on Wednesday 30 March 2022 and was dissolved on 11 April 2022, along with half of the Senate and will resume after the outcome of the election.

Page cross-references throughout the Report refer to the relevant page in this Report.

A list of acronyms and abbreviations is set out on page 3 of this Report.

For guidance, insights and resources on many of these measures, visit our member portal.

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

ECPI

Exempt current pension income

ESS

Employee share scheme

FBT

Fringe benefits tax

FHSSS

First Home Super Saver Scheme

GDP

Gross domestic product

GST

Goods and Services Tax

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

MYEFO

Mid-Year Economic and Fiscal Outlook

NALI

Non-arm’s length income

NANE

Non-assessable non-exempt (income)

OBU

Offshore banking unit

PAYG

Pay as you go

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

SAPTO

Seniors and pensioners tax offset

SMSF

Self-managed superannuation fund

SG

Superannuation Guarantee

STP

Single Touch Payroll

TFE

Temporary full expensing

TPAR

Taxable Payments Annual Report

TPRS

Taxable Payments Reporting System

UPE

Unpaid present entitlement

WHM

Working holiday maker

Legislation

Key Acts enacted prior to issue of previous State of
Tax Policy Report: December 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

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

(See further personal income tax relief in the 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

Enacted on 14 October 2020 as Act No. 92 of 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 and the increase to the offset for 2021–22 on page 17)

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

(continued ...)

No changes have been made to the already legislated third and final stage of the Personal Income Tax Plan that 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.

2024–25 and later income years

Director identification number regime

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

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

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

1 November 2021

STP reporting — child support information

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

Enacted on 3 September 2020 as Act No. 79 of 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.2

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 2022.3

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

Tax-free treatment of certain small business grants relating to COVID-19 recovery

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

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

Inserts new s 59-97 into the ITAA 1997 that 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.4

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

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

Extends 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).5

Refer to page 21 for associated legislative instruments.

Assessments for the 2020–21 and later income years



 



Exempts payments made in the 2021–22 financial year

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

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

Inserts new s 59-98 into the ITAA 1997 that 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.6

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

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

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

Assessments for the 2020–21 and later income years

Requirement for actuarial certificates for certain superannuation funds

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

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

1 October 2021

Australian Screen Production Incentive Reforms

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

Enacted on 7 December 2021 as Act No. 127 of 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%7 of total qualifying Australian production expenditure; and
  • make various threshold and integrity amendments across the three screen tax offsets.8

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

Key Acts enacted since issue of previous State of Tax Policy Report: December 2021

Measure

Details of enacted Act

Start date

Corporate collective investment vehicles (CCIV): tax framework

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

Enacted on 22 February 2022 as Act No. 8 of 2022

Inserts 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.

1 July 2022

Temporary loss carry back

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

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

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

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

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

Enacted on 22 February 2022 as Act No. 8 of 2022

Extends 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.

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 income tax return.

Companies with aggregated turnover of less than $5 billion are eligible for temporary loss carry-back.9

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

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 Act 2021

Enacted on 22 February 2022 as Act No. 8 of 2022

Amends 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).

1 July 2022

ESS: removing cessation of employment as a taxing point

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

Enacted on 22 February 2022 as Act No. 8 of 2022

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

1 July 2022

Removing the monthly minimum income threshold to count towards the SG

 

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

Enacted on 22 February 2022 as Act No. 10 of 2022

Amends 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 SG to cover employees who earn less than $450 of salary or wages in a calendar month from a single employer.

1 July 2022

FHSSS maximum releasable amount

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

Enacted on 22 February 2022 as Act No. 10 of 2022

Amends 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.

1 July 2022

Downsizer contributions

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

Enacted on 22 February 2022 as Act No. 10 of 2022

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

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) Act 2021

Enacted on 22 February 2022 as Act No. 10 of 2022

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

1 July 2022

Segregated current pension assets

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

Enacted on 22 February 2022 as Act No. 10 of 2022

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

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) Act 2021

Enacted on 22 February 2022 as Act No. 10 of 2022

Amends 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.

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

Medicare Levy Surcharge income thresholds

Schedule 1 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

Enacted on 31 March 2022 as Act No. 14 of 2022

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 SAPTO (along with the dependent child/student component of the family threshold), in line with movements in the CPI; and
  • the Medicare levy surcharge low-income threshold in line with movements in the CPI.

2021–22 and later income years

 

Deductibility of COVID-19 tests

Schedule 2 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

Enacted on 31 March 2022 as Act No. 14 of 2022

Inserts new s 25-125 into the ITAA 1997 by allowing an income tax deduction for taxpayers who incur relevant COVID-19 testing expenses in gaining or producing their assessable income. The deduction applies to relevant expenses incurred on or after 1 July 2021.

Broadly, the legislation provides a specific deduction for a taxpayer’s loss or outgoing incurred in gaining or producing assessable income. The loss or outgoing must be incurred in respect of a COVID-19 test with the purpose of determining whether the taxpayer should attend or remain at a place of work.

The exemption from FBT for tests provided by employers to their employees for work purposes is given effect through the operation of the ‘otherwise deductible rule’.

Losses and outgoings on or after 1 July 2021

Employee share schemes

Schedule 4 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

Enacted on 31 March 2022 as Act No. 14 of 2022

Provides regulatory relief to ESSs that meet particular requirements in order to make it easier for businesses to create ESS.

The Act implements:

30 September 2022

Varying the GDP uplift factor for PAYG and GST instalments

Schedule 5 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

Enacted on 31 March 2022 as Act No. 14 of 2022

Amends the TAA 1953 to reduce the GDP adjustment factor for the 2022–23 income year to 2%. The GDP adjustment factor is applied by the Commissioner to work out the amount of PAYG and GST instalments payable by a taxpayer in certain circumstances.

PAYG and GST instalments for instalment quarters that fall due for the 2022–23 income year

Low and Middle Income tax offset

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

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

Schedule 6 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

Enacted on 31 March 2022 as Act No. 14 of 2022

Amends the ITAA 1997 to increase the LMITO for the 2021–22 income year by $420 for all taxpayers who are able to receive the LMITO.

2021–22 income year

2022 cost of living payment ($250)

Schedule 8 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

Enacted on 31 March 2022 as Act No. 14 of 2022

Provides for the payment of a 2022 cost of living payment of $250 to Social Security and Veterans’ income support and compensation recipients, Farm Household Allowance recipients, and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Veteran Gold Card.

To qualify for the 2022 cost of living payment, a person must be residing in Australia and be receiving one of the qualifying payments or hold or have claimed and qualified for one of the qualifying concession cards on 29 March 2022.

1 April 2022

Fuel duty consequential amendments

Schedule 9 to the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022 in conjunction with Excise Tariff Amendment (Cost of Living Support) Act 2022 (the Excise Act) and the Customs Tariff Amendment (Cost of Living Support) Act 2022
(the Customs Act)

Enacted on 31 March 2022 as Act No. 14 of 2022

The Excise Act and Customs Act amend the Excise Tariff Act and the Customs Tariff Act respectively to temporarily reduce the excise duty rates and excise equivalent customs duty rates for fuels, including petrol and diesel and similar petroleum-based products, including oils and grease.

From 12:01am on 30 March 2022 until 28 September 2022

Tax depreciation incentive Acts

Measure

Details of enacted Act

Start date

Instant asset
write-off

Schedule 1 to the Coronavirus Economic Response Package Omnibus Act 2020

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

12 March 2020 to 30 June 202010

 

Backing business investment incentive

Schedule 2 to the Coronavirus Economic Response Package Omnibus Act 2020

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

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

Enacted on 19 June 2020 as Act No. 61 of 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 that would otherwise have ended on 30 June 2020.

1 July 2020 to 31 December 2020

Temporary full expensing (TFE) of depreciating assets

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

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

(See further amendment below to extend the measure by 12 months to 30 June 2023.)

 

Depreciating assets first held, and first used or installed ready for use, for a taxable purpose at or after 7:30pm AEDT on 6 October 2020 to 30 June 2022

Temporary full expensing of depreciating assets — amendments

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

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

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

  • providing an alternative mechanism11 to the existing test for working out if the $5 billion threshold applies to qualify for TFE; and
  • allowing entities to opt out of TFE and the backing business investment incentives on an asset-by-asset basis.

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

1 January 202112

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) Act 2021

Enacted on 22 February 2022 as Act No. 10 of 2022

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

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

Registered legislative instruments

Measure

Details of registered instrument

Start date

Superannuation — minimum pension draw down rates

Schedule 10 to the Coronavirus Economic Response Package Omnibus Act 2020

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

Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2022

Legislative instrument registered on 1 April 2022

Extends the temporary reduction in superannuation account-based pension minimum draw down rates for a further year to 30 June 2023.

This builds on the previous announcement and legislative instrument that extended the superannuation minimum draw down until 30 June 2022.

2019–20 to 2022–23 financial years

Eligible COVID-19 business grants and support programs

 

Section 59-97 of the ITAA 1997 treats monies from eligible grants provided by State and Territory Governments to be treated as NANE income.

The following legislative instruments list the eligible grants:

Income Tax Assessment (Eligible State and Territory COVID‑19 Economic Recovery Grant Programs) Declaration 2020

Legislative instrument registered on 24 December 2020

Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 1) 2021

Legislative instrument registered on 20 July 2021

Eligible payments received by eligible businesses in the 2020-21 and 2021-22 income years

(continued ...)

Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 2) 2021

Legislative instrument registered on 23 August 2021

Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 3) 2022

Legislative instrument registered on 4 April 2022

Eligible payments received by eligible businesses in the 2020-21 and 2021-22 income years

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

ATO legislative instrument MS 2022/1

Instrument registered on 4 January 2022

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.

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 Douglas13 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

Lapsed bills

On 10 April 2022, the Prime Minister, the Hon Scott Morrison, called a Federal election for 21 May 2022, resulting in the current term of Parliament (46th Parliament) to end and the dissolution of the House of Representatives and half of the Senate.

As a result of the writs for the general election being issued by the Governor-General on 11 April 2022, all Bills before the Parliament lapse as there is no provision for proceedings to be carried over from one Parliament to the next. New Bills must be introduced into the new Parliament in order for the proposed measures to be enacted as law.

Those Bills that:

  • were before the House or Representatives when the writs were issued lapsed on 11 April 2022 (described as ‘lapsed at dissolution’);
  • are before the Senate will lapse on the start of the 47th Parliament (described as ‘lapsed at end of Parliament’).

Measure

Details of lapsed Bill

Start date

Ending JobKeeper profiteering

This Private Member’s Bill14 the Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill 2021,

Before the Senate15

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.

The day after the enabling legislation receives Royal Assent

(continued ...)

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

Final Report

 

Sharing economy reporting regime

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

Before the Senate16

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.

Implements a recommendation of the report of the Black Economy Taskforce.

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

Before the Senate16

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.

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

Australian patent box regime for medical innovations

Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022

Before the House of Representatives

Proposes to amend the ITAA 1997 to introduce concessional tax treatment for ordinary and statutory income derived by a corporate taxpayer from exploiting a medical or biotechnology patent for income years commencing on or after 1 July 2022.

(See related announcement on page 38)

Applies to patents granted or issued after 11 May 2021 in respect of income years starting on or after 1 July 2022

Increased Tribunal powers for small business tax decisions

Schedule 3 to the Treasury Laws Amendment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022

Before the House of Representatives

Proposes to amend the TAA 1953 to enable small business entities to apply to the Small Business Taxation Division of the AAT for an order staying, or otherwise affecting, the operation or implementation of decisions of the Commissioner that are being reviewed by the AAT.

Applications for review made to the AAT on or after the day after Royal Assent

 

Assisting businesses to meet their record-keeping obligations

Schedule 1 to the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022

Before the House of Representatives

Proposes to amend Schedule 1 to the TAA 1953 to empower the Commissioner to direct an entity to complete an approved record-keeping course where the Commissioner reasonably believes the entity has failed to comply with its tax-related record-keeping obligations as an alternative to existing financial penalties.

3 months after the day of Royal Assent

Intangible asset depreciation

Schedule 3 to the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022

Before the House of Representatives

Proposes to amend the ITAA 1997 to provide taxpayers to choose whether to self-assess the effective life of eligible depreciating intangible assets (such as patents, registered designs, copyrights and in-house software), held on or after 1 July 2023, or to continue to use the tax effective life currently specified in the law.17

Applies to certain intangible depreciating assets that start to be held on or after 1 July 2023

 

Recovery grants for Cyclone Seroja

Schedule 5 to the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022

Before the House of Representatives

Proposes to amend the ITAA 1997 to provide further support for small businesses and primary producers impacted by Cyclone Seroja in April 2021.

This Schedule proposes to treat grants received in relation to Cyclone Seroja under Category C of the Disaster Recovery Funding Arrangements 2018 as NANE income for income tax purposes.

Applies to grants paid in the 2021–22 and later income years

 

Minor and technical amendments

Schedule 6 to the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022 and the Income Tax Amendment (Labour Mobility Program) Bill 2022

Before the House of Representatives

Proposes to reduce the effective tax rate on certain income earned by foreign resident workers participating in the Australian Agriculture Worker Program or the Pacific Australia Labour Mobility scheme from 32.5% to 15%.

Apply in relation to salary, wages, commission, bonuses or allowances paid to an employee under a relevant program on or after 1 March 2022

Tax treatment for new or revised visa programs

Schedule 7 to the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022

Before the House of Representatives

Proposes to make various miscellaneous and technical amendments, including:

  • delays the commencement of changes impacting the Business Registers program until the systems supporting the program are ready.
  • removing the direct link between the eligibility for the FBT rebate and access to elements of the FBT exemption for hospital employees to restore access to the exemption to certain tax exempt not-for-profit societies and associations
  • ensuring certain commutations do not exceed the transfer balance cap, applying to market-linked and life expectancy products only.




 

The day after Royal Assent

The first day of the quarter after Royal Assent

The day after Royal Assent

 

Exposure draft legislation

At the time of publication, exposure draft legislation and regulations had been released for comment for the measures set out in the table below. The Bills had not been introduced into Parliament.

Measure

Details of exposure draft Bill/Regulation

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.18
  • 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.

Regulations increasing the annual revenue thresholds apply from the 2021–22 financial year19

Changes to related party disclosures apply from the
2022–23 financial year20

 

(continued ...)

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.

 

Working Holiday Makers and Seasonal Labour Mobility Program

An exposure draft of the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Miscellaneous and Technical Amendments No. 2 and associated draft regulations, the 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 to:

  • non-residents retrospectively from 1 July 2019;
  • residents prospectively from the first 1 July after the enabling legislation receives Royal Assent

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 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 the Income Tax Assessment (1997 Act) Regulations 2021, the Superannuation Industry (Supervision) Regulations 1994 and the 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

An exposure draft of 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.21

The measure 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

Digital Games Tax Offset (DGTO)

An exposure draft of the Treasury Laws Amendment (Measures for Consultation) Bill 2022: Digital games tax offset was released on 21 March 2022.

The draft Bill proposes to insert new Div 378 into the ITAA 1997 to 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 will be $20 million.

1 July 2022

Policy developments and announcements

Discussion papers

Measure

Details of discussion paper

Start date

Early access to superannuation for crime victims

Consultation Paper released on 27 May 2018 that 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 that 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 that 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 that 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 50)

1 July 2019

Division 7A

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

Relevant dates:

l 18 May 2012   Assistant Treasurer (Labor) commissioned a review by the Board of Taxation (the Board)

l 12 Nov 2014   Final report provided by the Board to the Government

l 4 Jun 2015     Board’s final report released by Treasury — 15 recommendations to reform Div 7A

l 3 May 2016   Budget announcement — proposed reforms to commence from 1 July 2018

l 8 May 2018   Budget announcement — defer reforms to 1 July 2019

l 22 Oct 2018   Release of Treasury Consultation paper

l 2 Apr 2019     Budget announcement — defer reforms to 1 July 2020

l 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 that 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

Reform of Australia’s electronic surveillance framework

Discussion Paper released on 6 December 2021 by the Department of Home Affairs to provide an overview of how the Government plans to reform Australia’s electronic surveillance legislative framework.

Relevantly, these reforms include expanding the ATO’s power to access telecommunications data in order to protect public revenue against serious financial crime.

2023

DGR category for pastoral care services

Consultation Paper released on 2 March 2022 that seeks input on the implementation and design of a new DGR category to enable funds to access DGR status where the fund supports pastoral care services delivered to students in Australian primary and secondary schools.

The proposed new category will be implemented through amendments to the ITAA 1997.

TBA

Distribution guidelines for ancillary funds

Consultation Paper released on 22 March 2022 that sets out a proposal to provide greater flexibility to ancillary funds22 while preserving their philanthropic nature.

TBA

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.

Proposes to prevent 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 Assent23

ABN system reforms

Announced on 2 April 2019 as part of the Federal Budget 2019–20.

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 start date of the measure was deferred by 12 months, as announced in the Federal Budget 2022–23. For more information, refer to The Tax Institute’s Federal Budget 2022–23 Report.

Targeted consultation by the ATO to co-design solutions has concluded. Further consultation to
co-design the administrative approach is currently planned.



 

1 July 2022

1 July 2023

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.

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

(continued ...)

Targeted consultation to understand the existing corporate records for FBT that employers hold has concluded. The information provided during consultation will be used to develop guidance to support legislative changes once they have passed.

 

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 new law from 15 March 2017)

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

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 Assent24

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 MP, 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 2021.25

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

Non-arm’s length income (NALI)

Announced on 22 March 2022.

The Government will make legislative changes to ensure the NALI provisions operate as envisaged.

The Government and Treasury will consult with relevant industry stakeholders on the appropriate operation of the NALI provisions. Further details of the consultation process will be provided as soon as practicable.

1 July 2022

New small business skills and training boost

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

Will allow eligible small businesses with an aggregated turnover of less than $50 million to claim an extra 20% (allowing them to claim 120%) of the expenditure incurred on external training courses provided to their employees.

The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia. Some training will be excluded, including in-house and on-the-job training, and expenditure on external training courses for persons other than employees.26

The temporary increased deduction will be available for eligible expenditure incurred between 7:30pm AEDT on 29 March 2022 and 30 June 2024

New small business technology investment boost

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The measure will allow eligible small businesses with an aggregated turnover of less than $50 million to claim an extra 20% (allowing them to claim 120%) of the cost of the expenditure incurred on business expenses and depreciating assets that support the business’ digital adoption. These include portable payment devices, cyber security systems or subscriptions to cloud based services.

An annual cap of $100,000 will apply in each qualifying income year.27

The temporary increased deduction will be available for eligible expenditure incurred between 7:30pm AEDT on 29 March 2022 and 30 June 2023

Expansion of patent box regime

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The Government announced it will expand the regime to cover the agricultural sector and low emissions technology innovations, the latter being foreshadowed as a possibility in last year’s Budget.

In the case of agricultural patents, the regime will apply to corporate taxpayers that commercialise their eligible patents linked to certain listed agricultural and veterinary chemical products. It will apply to patents issued after 29 March 2022 for income years starting on or after 1 July 2023. The same dates will apply for patents related to those low emission technologies identified by the Government in 2020 and 2021 statements.

The Government also announced that it will now allow patents granted after 11 May 2021 in the medical and biotechnology sectors to also be eligible for the regime, and recognise patents granted under the US and European regimes as well as those granted by IP Australia.

The Government proposes to consult with industry on the detailed design of the patent box expansion.



1 July 2023








1 July 2022

Modernisation of PAYG instalment system

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The Government will allow companies to choose to have their PAYG instalments calculated based on current financial performance better aligning PAYG liabilities with business revenue.

The calculation of the PAYG instalments will be extracted from business accounting software, with some tax adjustments.

The Government will consult with affected stakeholders, tax practitioners and digital service providers to finalise the policy scope, design and specifications of the measure.

Software providers are expected to have systems in place by 31 December 2023.

1 January 2024

Smarter reporting of Taxable Payments Reporting System (TPRS) data

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The Government will enable businesses the option to report TPRS data through accounting software on the same lodgment cycle as their business activity statements.

This will allow the Taxable Payments Annual Report (TPAR) to be lodged electronically on a monthly or quarterly basis instead of annually The Government will consult with affected stakeholders, tax practitioners and digital service providers to finalise the policy scope, design and specifications of the measure.

Software providers are expected to have systems in place by 31 December 2023.

1 January 2024

Extension of the ATO’s Tax Avoidance Taskforce

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The Government will provide $325.0 million in 2023–24 and $327.6 million in 2024–25 to the ATO to extend the operation of the Tax Avoidance Taskforce by 2 years to 30 June 2025.28

2023–24 and 2025–26 financial years

Digitalising trust income reporting

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The Government will digitalise trust and beneficiary income reporting and processing, by allowing trust income tax returns to be lodged electronically.29

The Government will consult with affected stakeholders, tax practitioners and digital service providers to finalise the policy scope, design and specifications.

1 July 2024

Enhanced sharing of Single Touch Payroll (STP) data

Announced on 29 March 2022 as part of the Federal Budget 2022–23.

The Government will commit funds for the development of the IT infrastructure required to allow the ATO to share STP data with State and Territory Revenue Offices on an ongoing basis.

To be confirmed

Consultation on car parking fringe benefits

Announced on 29 March 2022.

The Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar MP, announced that the Government will undertake a public consultation to identify appropriate modifications to the definition of ‘commercial parking station’ with a view to restoring the previously‑understood interpretation, which better reflects the policy intention of the law.

The announcement comes in response to recent court decisions30, that have overturned the understanding that parking car parks charging penalty rates for
all-day parking did not represent genuine alternatives for commuters and therefore did not trigger an FBT liability for employers.

Car parking fringe benefits provided from 1 April 2022

Reviews

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 of Taxation (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

Final Report

Completed

Final Report delivered to the Government in December 2021 and published on 4 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-agency31 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

Final Report

Completed

Final Report delivered to the Government in November 2021 and published on 29 March 2022

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.32

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 2020.33

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 29 March 2022

Review of the Tax Treatment of Digital Assets and Transactions in Australia

On 8 December 2021, the Treasurer, the Hon Josh Frydenberg MP, announced as part of a broader response to a review on Australia’s payments system and the regulation of digital assets, that the Government would task the Board with undertaking a review into the appropriate policy framework for the taxation of digital transactions and assets in Australia.

On 21 March 2022, the Government released the Terms of Reference for a review to be undertaken by the Board into the appropriate policy framework for the taxation of digital assets and transactions in Australia.

Terms of Reference

Current

Final Report to be delivered to the Government by the end of 2022

Inspector-General of Taxation and Taxation Ombudsman reviews

Review

Details of IGTO review

Status of review

Effectiveness of the ATO’s 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

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

ATO’s exercise of its general powers 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

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?

Completed

Final Report published on 4 April 2022

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 in April 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

Consultation Paper

Current

Announced on 7 July 2021

Final Report was expected to be delivered to the Government at the end of 2021

Parliamentary Committee reviews

Review

Details of Parliamentary Committee review

Status

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

Final Report

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.

Completed

Final Report was delivered to the Government on 3 February 2022 and was released in February 2022

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.

Review home page

Terms of Reference

Interim Report

Current

Final Report due to be delivered to the Government by 30 June 202234

ATO guidance and information

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 of final ATO guidance

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

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

Deductibility of expenses incurred in establishing and administering an employee share scheme (ESS)

Taxation Determination TD 2022/8 sets out the Commissioner’s view on the deductibility of expenses incurred by an employer to establish and administer an ESS. This expense often includes establishing and administering an 'employee share trust'.

The Determination applies to arrangements before and after its date of issue.

Draft guidance

Measure

Details of draft ATO guidance

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, that 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: July 2022

Section 100A reimbursement agreements

Draft Taxation Ruling TR 2022/D1 sets 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 Ruling is proposed to apply to arrangements entered into both before and after the Ruling is finalised.

This was also accompanied by draft Practical Compliance Guideline PCG 2022/D1 sets out the Commissioner’s compliance approach in relation to s 100A reimbursement agreements, including transitional arrangements.

The Commissioner’s compliance approach is proposed to apply to present entitlements conferred both before and after the Guideline is finalised. However, for present entitlements conferred before 1 July 2022, the Commissioner has indicated that it will stand by any administrative position reflected in web guidance published in July 2014, to the extent that it is more favourable to a taxpayer’s circumstances than the draft PCG.

See also the Assistant Treasurer’s Media Release on 7 April 2022.

The Tax Institute’s two submissions to the ATO on:

  • draft Taxation Ruling TR 2022/D1 can be found here
  • draft Practical Compliance Guideline PCG 2022/D1 and Taxpayer Alert TA 2022/1 can be found here.

Expected completion: To be advised

UPEs of private company beneficiaries (Division 7A)

Draft Taxation Determination TD 2022/D1 sets 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 Division 7A of Part III of the ITAA 1936, as that beneficiary has provided ‘any other form of financial accommodation’ under s 109D(3) of the ITAA 1936 to the trustee.

The draft Determination comes as a result of 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. These ATO products will be withdrawn when TD 2022/D1 is finalised.

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. The existing guidance will continue to apply to current arrangements.

The Tax Institute’s submission to the ATO on their draft Taxation Determination, TD 2022/D1, can be found here.

Expected completion: To be advised

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: June 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: August 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, that 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 31)

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 of useful AO links

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.

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

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

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

Operates from 7 October 2020 to 6 October 2022

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

Registered on 4 December 2020 as Legislative Instrument F2020L01534

Treasurer’s rules about JobMaker Hiring Credit

Operates from 7 October 2020 to 6 October 2022

 

Further guidance and information

Further guidance and information is available from the ATO website.

If you have any specific concerns that have not been outlined above, please email taxpolicy@taxinstitute.com.au.

 

Footnotes

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

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

3 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 could 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.

4 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.

5 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.

6 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.

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

8 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.

9 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.

10 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 19).

11 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).

12 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 TFE measure: para 1.41 of the Explanatory Memorandum to the Bill.

13 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.

14 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.

15 Introduced into the Senate on 21 June 2021.

16 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.

17 This measure was previously contained in Schedule 2 to the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017 that 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.

18 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.

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

20 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).

21 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.

22 By way of background, an ancillary fund is a trust set up and maintained solely for the purpose of providing money, property or benefits to DGRs. Although an ancillary fund is also a DGR, it does not undertake charitable work. Instead, it acts as an intermediary between donors and DGRs that do undertake such work.

23 The 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.

24 When the measure was announced, the Government expected this to have occurred before 1 July 2022.

25 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.

26 The increased deduction for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year (that is, in the 2023 income tax return). The extra deduction for eligible expenditure incurred between 1 July 2022 and 30 June 2024 will be claimed in the income year in which the expenditure is incurred (that is, in the 2023 and/or the 2024 income tax return).

27 The increased deduction for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year (that is, in the 2023 income tax return). The extra deduction for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be claimed in the income year in which the expenditure is incurred (that is, in the 2023 income tax return).

28 The ATO’s total resourcing requirement, including for the delivery of the extension of the Tax Avoidance Taskforce, will be settled as part of the independent review of the ATO’s ongoing resourcing requirement announced as part of the MYEFO 2021–22 measure titled Australian Taxation Office – continuation of compliance programs and independent resourcing review.

As part of the MYEFO 2021–22 measure, the Government committed to provide funding of $111.0 million to continue the ATO’s personal income taxation and shadow economy compliance programs, and $0.6 million for an independent review of the ATO’s ongoing resourcing requirements. The programs are funded to 30 June 2023.

The amounts committed a part of the Federal Budget 2022–23 measure will be factored into the outcome of the commissioned report. At the date of publication, there is no information about the scope or outcomes of the independent review.

29 To date, trust income reporting and assessment calculation processes have not been automated to the same extent as individual or company tax returns. While tax agent lodgment systems have catered for trust tax returns, trustees have not been able to lodge tax returns themselves electronically. This has resulted in longer processing times and limited pre-filling opportunities.

30 For example, Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd [2021] FCAFC 209.

31 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.

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

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

34 The Final Report was due to be delivered to the Government by 31 March 2022. On 29 March 2022, the committee’s reporting date was extended to 30 June 2022.

Publish date: 5 May 2022 

  • Tax administration