As notified in our special Budget edition of TAXVINE - 2010 TAXVINE No 19 (11 May 2010) - the Government has announced that it is proposing to adjust the benchmark interest rate that applies to capital protected borrowings to the Reserve Bank of Australia (RBA) indicator rate for standard variable housing loans plus 100 basis points, instead of the RBA indicator rate for standard variable housing loans as announced in the 2008-09 Budget.
The benchmark interest rate that applies to capital protected borrowings entered into after 7:30pm (AEST) on 13 May 2008 will be adjusted to the Reserve Bank of Australia’s Indicator Rate for Standard Variable Housing Loans plus 100 basis points. The transitional arrangements for capital protected borrowings entered into at or before 7:30pm (AEST) on 13 May 2008 will be extended to 30 June 2013 to reduce compliance costs for affected taxpayers in the 2012-13 income year.
The Assistant Treasurer has now released exposure draft legislation on the taxation of capital protected borrowings for consultation on the technical aspects of the amendments. The exposure draft legislation gives effect to the announced changes to the taxation of capital protected borrowings.
The closing date for submissions is Friday 11 June 2010.