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On 26 May 2010, Tax Laws Amendment (2010 Measures No 3) Bill 2010 was introduced into the House of Representatives. The following is an extract from the Explanatory Memorandum.

SCHEDULE 1 to the Bill freezes indexation of the co-contribution income thresholds for the 2010-11 and 2011-12 income years. Schedule 1 also permanently maintains the current matching rate and maximum co-contribution that is payable on an individual’s eligible superannuation contributions. Date of effect is 1 July 2010.

SCHEDULE 2 to the Bill amends the operation of the thin capitalisation rules for authorised deposit-taking institutions (ADIs) to take account of the change in the accounting treatment of certain assets from the adoption of the Australian equivalents to International Financial Reporting Standards in January 2005. These amendments will apply to income years commencing on or after 1 January 2009.

In media release No 2010/117, issued 26 May 2010, the Assistant Treasurer, Senator Nick Sherry commented on the amendments to the thin capitalisation tax rules as they apply to ADIs.

SCHEDULE 3 to the Bill amends the tax law to provide the heads of the Australian Security Intelligence Organisation and the Australian Secret Intelligence Service with the power to declare that Commonwealth tax laws do not apply to a particular entity in relation to a particular transaction. This ensures that the tax authorities will not need to obtain information that should remain secret in the interests of national security. Date of effect is Royal Assent.

SCHEDULE 4 to the Bill amends Division 6 of the ITAA 1936 so that the unexpended income of a Special Disability Trust is taxed at the relevant principal beneficiary’s personal income tax rate rather than automatically at the top personal tax rate plus the Medicare levy. These amendments apply from 1 July 2008 and are beneficial to taxpayers. 

In joint media release No 2010/116, the Parliamentary Secretary for Disabilities, Bill Shorten, and the Assistant Treasurer, Senator Nick Sherry, commented on the changes to the tax treatment of unexpended income of a special disability trust.

SCHEDULE 5 to the Bill amends the definition of a ‘managed investment trust’ (MIT) in Subdivision 12-H of Schedule 1 to the Taxation Administration Act 1953. The amended definition will apply for the purposes of the MIT withholding tax rules in that Subdivision, and for the purposes of the deemed capital account rules for MITs in Division 275 of ITAA 1997. These amendments to the definition of a MIT also apply in relation to CGT events happening on or after 1 November 2008, for the purpose of Subdivision 126-G of the ITAA 1997. The amendments will apply from various dates.

In media release No 2010/118, issued 26 May 2010, the Assistant Treasurer, Senator Nick Sherry commented on the new definition of an MIT. "These changes will better align the definition of an MIT across the relevant tax laws, but it will also, subject to appropriate integrity measures, see wider access to MIT concessions for certain wholesale trusts, including certain domestic private equity entities," the Assistant Treasurer said.


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