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13 Oct 1111 2011 Measures No 8 Bill introduced

On 13 October 2009, Tax Laws Amendment (2011 Measures No 8) Bill 2011 (the Bill) and Pay As You Go Withholding Non-compliance Tax Bill 2011 were introduced into the House of Representatives. The following is extracted from the Explanatory Memorandum.

SCHEDULE 1 to the Bill amends the Income Tax Assessment Act 1997 to provide the Commissioner of Taxation with discretion to disregard certain events (for example, when a beneficiary becomes insolvent) that would otherwise trigger the assessment of certain income for a primary production trust, in the year of the event. These amendments will apply to the 2005-06 income year and later income years.

SCHEDULE 2 to the Bill amends the Petroleum Resource Rent Tax Assessment Act 1987 to provide certainty regarding how the ‘taxing point’ is determined for the purposes of the Petroleum Resource Rent Tax (PRRT). The taxing point is central to the determination of PRRT liabilities, and was recently considered by the Federal Court in Esso Australia Resources Pty Ltd v The Commissioner for Taxation [2011] FCA 360. These amendments provide statutory reinforcement of the Federal Court’s decision, affirming the long-established application of the PRRT law. Date of effect: 1 July 1990.

SCHEDULE 3 to the Bill strengthens directors’ obligations to cause their company to comply with its existing pay as you go (PAYG) withholding and superannuation guarantee requirements. These amendments reduce the scope for companies to engage in fraudulent phoenix activity or escape liabilities and payments of employee entitlements by:

  • extending the director penalty regime to make directors personally liable for their company’s unpaid superannuation guarantee amounts;
  • allowing the Commissioner of Taxation (Commissioner) to commence proceedings to recover director penalties three months after the company’s due day where the company debt remains unpaid and unreported after the three months passes, without first issuing a director penalty notice; and
  • in some instances making directors and their associates liable to PAYG withholding non-compliance tax where the company has failed to pay amounts withheld to the Commissioner.

The tax on directors and their associates is imposed by the Pay As You Go Withholding Non-compliance Tax Bill 2011.

Broadly, these amendments will commence on the day on which the Bill receives Royal Assent.

SCHEDULE 4 to the Bill makes minor consequential amendments to the taxation arrangements for gaseous fuels. The changes ensure that the legislation applies as intended and does not impose excessive compliance costs on industry. These amendments apply from 1 December 2011.

In media release No 2011/138, issued 13 October 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, commented on the provisions of the Bill designed to protect workers' superannuation and deter fraudulent "phoenix company" activity.


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