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02 Jun 11 Further Budget and other amendments introduced

On 2 June 2011 the Minister for Financial Services and Superannuation, Mr Shorten, introduced the Tax Laws Amendment (2011 Measures No 5) Bill 2011 into the House of Representatives.

The Bill will make the following amendments.

  • Primary producers’ income averaging and farm management deposits: The Bill will amend Divisions 392 and 393 of the ITAA 1997 to allow trust beneficiaries to continue to use the primary production averaging (income averaging) and farm management deposits (FMDs) provisions in an income year where the trust does not have any trust law income (trust income) to which a beneficiary can be presently entitled (for example, because the trust has a loss for trust law purposes). This measure will apply where the income year of the trust is the 2010-11 income year or a later income year. It was announced in the Assistant Treasurer and Minister for Financial Services and Superannuation’s Media Release No 025 of 16 December 2010.
  • Interim changes to improve the taxation of trust income: The Bill will amends Subdivision 115-C and Subdivision 207-B of the ITAA 1997 to ensure that, where permitted by the trust deed, the capital gains and franked distributions (including any attached franking credits) of a trust can be effectively streamed for tax purposes to beneficiaries by making them “specifically entitled” to those amounts. The Bill will also amend Division 6 of Part III of the ITAA 1936 to include specific anti-avoidance rules to address the potential opportunities for tax manipulation that can result from the inappropriate use of exempt entities as beneficiaries. This measure applies for the 2010-2011 income year and later income years. It was announced in the Assistant Treasurer and Minister for Financial Services and Superannuation’s Media Release No 052 of 13 April 2011.
  • National Rental Affordability Scheme: The Bill will address several technical issues which have arisen from the interaction between the tax law and the National Rental Affordability Scheme Act 2008 and the associated regulations. These amendments also simplify the operation of the National Rental Affordability Scheme (NRAS) for participants and provide some additional flexibility to NRAS participants in how the incentive is shared between members of consortiums participating in the NRAS. The amendment to the treatment of State and Territory NRAS-related payments applies from the 2008-09 income year. The amendments providing for an optional election apply from the 2010-11 income year. The remaining amendments apply from the 2009-10 income year.
  • Phasing out the dependent spouse tax offset: The Bill will amend the ITAA 1936 to implement the 2011-2012 Budget measure to phase out the dependent spouse tax offset, with effect from 1 July 2011.
  • Reform of the car fringe benefits rules: The Bill will amend the Fringe Benefits Tax Assessment Act 1986 to reform the current statutory formula method for determining the taxable value of car fringe benefits by replacing the current statutory rates with a single statutory rate of 20%, regardless of kilometres travelled. These amendments will apply to commitments made after 7:30 pm AEST on 10 May 2011 and will be phased in over four years. Existing contracts will be grandfathered and therefore subject to existing arrangements. These amendments were announced in the 2011-2012 Budget.