On 13 May 2010, Tax Laws Amendment (Foreign Source Income Deferral) Bill (No 1) 2010 was introduced into the House of Representatives. The following is an extract from the Explanatory Memorandum.
SCHEDULE 1 to the Bill repeals the foreign investment fund (FIF) and the deemed present entitlement rules contained in the ITAA 1936. The Schedule also makes consequential amendments to the ITAA 1936, the ITAA 1997 and to the Superannuation Industry (Supervision) Act 1993 as a result of the repeal of the FIF and deemed present entitlement rules.
More specifically, Part 1 of the Schedule:
- repeals section 96A, Part XI (the FIF rules) and sections 96B and 96C (the deemed present entitlement rules) of the ITAA 1936;
- makes consequential amendments to the ITAA 1936 and the ITAA 1997 as a result of the repeal of these rules; and
- preserves the effect of certain elections that are currently linked to the operation of the FIF rules.
Part 2 of this Schedule ensures the provisions dealing with the disposal of interests in foreign entities where amounts have been previously attributed will continue to operate as intended.
The amendments generally apply in respect of the 2010-11 and later income years. However, some of the amendments have earlier commencement dates to correct anomalies that exist in the current tax laws. These amendments do not disadvantage taxpayers as they ensure double taxation does not occur in respect of previously taxed amounts.
In media release No 2010/106, 13 May 2010, the Assistant Treasurer, Senator Nick Sherry, commented on the introduction of the Bill.
"The Government has listened to feedback from industry and stakeholders in drawing up this legislation and the repeal has already been widely endorsed," the Assistant Treasurer said.
The Government's other reforms to the foreign source income attribution rules, including the modernisation of the CFC rules, improvements to the transferor trust rules and the introduction of the anti-roll-up fund rule, which will apply from the time the FIF rules are repealed, will be introduced into the Parliament as soon as practicable.