11 March 1996 - 3 December 2007
Business Tax Reform Implementation Timetable
Today the Government is announcing the timetable for delivering the remaining elements of the business tax reform package.
The major elements of the business tax reform package have already been introduced, including delivery of an internationally competitive company tax rate, a halving of the CGT rate for individuals, scrip for scrip rollover relief and improved arrangements to facilitate venture capital to assist start-up and innovative enterprises.
Significant progress has been made in developing further aspects of the reform package. In most cases, the Government has adopted the practice of releasing exposure drafts of legislation in order to identify issues of concern to the business community and to consult on implementation.
An orderly phasing of the further changes will assist business adjust to the new provisions and ensure that the benefits of the new tax system and business tax arrangements can be fully captured. The Government is consulting with the Board of Taxation on progressing further measures. The Board has also recommended staging implementation to allow greater time for adjustment.
Implementation of the remaining business tax changes will therefore be staged, with the commencement date for several measures originally intended for 1 July this year being deferred to 1 July 2002. Details are outlined in the attachment.
The measures which will begin as planned from 1 July this year, include the simplified tax system for small business, a new unified capital allowances system to streamline the present law and to recognise certain blackhole expenditures, the proposed thin capitalisation measures applying to multi-national corporations which will strengthen the Australian tax base and a new test in the tax law to distinguish debt from equity.
Those measures which will be deferred to 1 July 2002 include the consolidation regime, general value shifting rules, foreign income account and non resident withholding tax regime, and simplified imputation arrangements.
While some large businesses are prepared and ready for the consolidation regime, consultation has shown that the majority of business (particularly small and medium enterprises) is not yet ready. The Board of Taxation has recommended deferral for a year and this will also allow finalisation of outstanding issues.
As previously announced, the Government will not be proceeding with the draft legislation on entity taxation. As a consequence, the current tax law for trusts will continue to apply, including ongoing access to the 50 per cent CGT discount, providing the trust asset had been held for at least 12 months. For beneficiaries with fixed interests in a trust, from 1 July 2001 cost base adjustments will not be required for distributions from the 50 per cent CGT discount, but an adjustment will need to be made on receipt of distributions of non-assessable amounts associated with building allowances. In addition, neither the rollover relief that was to be provided to facilitate restructuring as a result of the unified entity regime nor the early refund of excess franking credits for closely held entities is now required. (Refunds of excess imputation credits will be available upon assessment for dividends paid from 1 July 2000.)
The exposure draft legislation on entity taxation also contained provisions for simplifying the imputation system, including imputation credits for foreign dividend withholding tax. The consultation process has raised several issues and options which could reduce compliance costs. In giving close consideration to these, the Government recognises that sufficient advance notice and certainty of the detail of the final arrangements is necessary for taxpayers and accordingly will defer their commencement.
Where the commencement date of a measure is being deferred, it is still the Governments intention to introduce legislation into the Parliament at the earliest opportunity to assist taxpayers in the lead up to commencement.
Contact: Sandra Peacock (ATO): (02) 6216 1615
REVISED TIMELINE FOR BUSINESS TAX REFORM IMPLEMENTATION
Measures to commence from 1 July 2001
The following measures will commence from 1 July 2001:
Measures to commence from 1 July 2002
The following measures will now commence from 1 July 2002:
Measures with commencement dates yet to be determined
Other measures, including those which the Government supported in principle in its original announcement but without specific start-up dates, will be deferred in terms of their final consideration and commencement (not before 1 July 2002).
General anti-avoidance rule. The Government is continuing to develop measures that will streamline the existing anti avoidance provisions along the lines identified by the Ralph Report. Any amendments to the existing Part IVA provisions announced by the Government will now have effect from the time of introduction into the Parliament of the relevant legislation (rather than 11 November 1999 as originally intended).