Limbo Tax Legislation Clean Up
Posted on Monday, December 2nd, 2013
The Government has revealed that it will deal with a backlog of 92 announced but unlegislated tax and super measures.
For the 18 measures to be progressed, the Government expects these to be passed by Parliament by 1 July 2014.
The measures to be enacted include:
- The net medical expenses tax offset will still phase out with existing claimants continuing to be entitled to the offset until the 2014-2015 year. Following this, the offset will only apply in very limited circumstances.
- Proceed with changes to the tax consolidation regime.
- Enact changes that will mitigate ‘dividend washing‘ which is an arrangement whereby a taxpayer can receive double the franking credit entitlement in respect of one dividend.
- The Research and Development tax offset will no longer be available to large companies with incomes of $20 billion or more.
Two controversial measures of the previous Government will not proceed:
- Self-education expenses will continue to be deductible in the normal way with no cap.
- There will no longer be a tax on super fund earnings that support pensions above $100,000 during pension phase.
Plus, Kevin Rudd’s announcement during the election campaign that the statutory method of the car fringe benefit rules will be scrapped, will obviously not progress. This measure didn’t make it beyond a media release.
A number of important announced measures remain that have yet been addressed. These include the franking credit holding period rule and the CGT consequences of earn-out agreements, among others.
The Government has also confirmed that it will undertake a review into the effectiveness of the Division 7A rules and the taxation of trusts regime as part of a separate exercise. The aim of this review is to determine whether the rules can be improved and simplified.
Media Release – Restoring integrity in the Australian tax system
Media Release – Board of Taxation Review extended (Div 7A)
Source – Knowledge Shop Dec 2013