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These regular publications are designed to assist RSM Bird Cameron's clients and contacts keep up to date with the changes in tax laws.
With the release on Friday 3 May 2013 of a Treasury ‘Issues Paper’, Assistant Treasurer David Bradbury has taken the next step in progressing Australia’s response to the international phenomenon of Base Erosion and Profit Shifting (BEPS). Three specific questions are raised for consultation, with responses due by 31 May 2013. A Treasury Scoping Paper is due to follow in late June 2013, in time to feed into the G20 Finance Ministers Meeting in Moscow in mid-July 2013.
On 15 June 2011, the Government announced its intention to introduce quarterly credits for companies entitled to the R&D refundable tax offset. In April 2013, almost two years on, the R&D Explanatory Memorandum has been issued for discussion.
Temporary Visa Holders - April 2013
Temporary visa holders are your Australian tax obligations up to date? If not, take action now to avoid any investigation by the ATO! If you are not familiar with your Australian tax obligations, now is the time to seek advice.
The Federal Government has made its next move in fighting the international tax wars – a Treasury Discussion Paper, released on 3 April 2013, outlines three proposals which aim to ‘improve the transparency of Australia’s business tax system.’
The proposals are:
On 13 February 2013 the Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013 was introduced into the House of Representatives, but in an election year, has progressed no further. Among other things, the bill contains provisions proposing to allow corporate entities which are in a tax loss position in the current year to offset the tax losses against income tax that has been paid in the previous two financial years. Effectively allowing them to rewind the loss back to prior years.
Further to Treasury's exposure draft released in mid-November, the Government has now introduced into Parliament stage two of the transfer pricing reforms, the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013. This Bill contains both stage two of the transfer pricing reform project, and the new general anti-avoidance provisions. These measures combined present the Commissioner with substantially increased powers at the time of falling tax revenue.
The Australian Government has released an exposure draft (“ED”) Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013: Modernisation of transfer pricing rules which proposes amendments that update Australia’s domestic transfer pricing rules.
This ED represents Stage 2 of Australia’s transfer pricing reform process which aims to better align domestic law with transfer pricing approaches set out by the OECD (Organisation for Economic Cooperation and Development), protect the Australian tax base, and improve the integrity and efficiency of the Australian tax system.
International businesses operating into and out of Australia need to be aware of three significant current tax developments. Two are directly attributable to OECD initiatives and the third indirectly so. This note considers the first of the three, the Board of Taxation’s Review of the OECD’s new approach to attributing profits to a permanent establishment (‘PE’). Separately, the OECD is progressing its “clarification” of the definition of permanent establishment (the subject of a later note), whilst finally the second tranche of Australia’s transfer pricing rules re-write is anticipated before the end of the year.
Our Tax Update of 28 August 2012 explained the changes to the LAFHA. Under the changes, an employee who receives a LAFHA for accommodation incurred whilst living away from home, is required to substantiate their expenses in full, irrespective of the amount of the allowance received or the accommodation expenses incurred. An employee who receives a LAFHA for food and drink expenses incurred whilst living away from home, is not required to substantiate the expenditure if the amount received by the employee is within the ‘reasonable’ amounts set by the Commissioner.
In October, the Government released their Mid-Year Economic and Fiscal Outlook (“MYEFO”) report confirming what everybody expected, that the economy is not performing as expected. Falling commodity prices and reduced tax receipts have had a signifi cant impact on the Federal Budget surplus. Whilst the expected changes to tax and superannuation policy did not materialise as part of the MYEFO, the Government has used a mix of sleight of hand, in the form of revenue timing changes, and modest fee increases to balance the budget.
The Tax Laws Amendment (2012 Measures No. 4) Bill has now been passed by both houses of Parliament. It is now only waiting on Royal Assent which should be delivered as a matter of course. This means taxpayers finally have a definitive answer on what the new Living Away From Home Allowance (‘LAFHA’) rules entail and can actively put in place measures to minimise their exposure.
The Australian Taxation Office released its Annual Compliance Program for 2012-13 on 19 July 2012. The Compliance Program identifies the key risk areas that will be of focus in the ATO’s risk reviews and audits for various taxpayer segments.
On Thursday 28th June 2012, the Government introduced into Parliament a bill to implement the previously announced Living Away From Home Allowance changes.
Thursday 24 May, the Government introduced into Parliament its first piece of draft legislation in its reform of Australia’s transfer pricing provisions. This legislation is the culmination of the Government’s consultation to date on this subject, including the release of an exposure draft and the receipt of submissions in this regard.
Finally we have received the draft legislation which will bring into play the sweeping changes to "living away from home" allowances and "living away from home" benefits, from 1 July 2012 for both "Australians" and "temporary residents" of Australia.
The concept of providing tax free housing and food to an employee who is "living away from home" (LAFH) has largely been scrapped; well, compared to the level we have known for the past 25 years!
Final countdown for changes to “Living Away From Home” Benefits - April 2012
In November 2011, the Federal Government announced sweeping changes to the “ living away from home” fringe allowance (LAFHA) and other LAFH concessions, which will take from 1 July 2012.
Since the initial statement there have been no further announcements or developments.
We understand from Treasury the changes will take effect from 1 July 2012, but that there may be no legislation in place by that date to permit employers (and employees) to understand the extent of the changes; the consequences of those changes; and to take any remedial action as maybe appropriate.
On Friday 16th March 2012, the Australian Government released an Exposure Draft, (“ED”), outlining the first stage of its rewrite of Australia’s transfer pricing rules. Importantly, these changes are proposed to apply retrospectively from 1 July 2004. The proposed changes follow on from a
Treasury consultation paper released on 1 November 2011.
Most Australian taxpayers have for many years operated in a self assessment environment, under which the information disclosed to the ATO in annual income tax returns has generally been limited to the outcome of their transactions and tax positions. More detailed information has only been required to be disclosed in the (relatively unusual) event of an ATO review or audit.