What’s new?
Temporary budget repair levy
Various rates of tax that apply to superannuation entities have been increased in line with the temporary budget repair levy of 2% payable by some individuals for the 2014/15 to 2016/17 financial years. Rates affected include those that apply to the taxable income of non-complying superannuation funds and non-complying approved deposit funds (ADFs) (45% to 47%) and the non-arm’s-length component of the taxable income of a superannuation fund, ADF or PST (45% to 47%).
Early stage venture capital limited partnership tax offset
From 1 July 2016, a fund that is a limited partner of an early stage venture capital limited partnership (ESVCLP) may qualify for:
- a non-refundable carry forward tax offset of up to 10% of their contribution to an ESVCLP. The ESVCLP must have become unconditionally registered on or after 7 December 2015. This includes an ESVCLP that was conditionally registered before this time and then became unconditionally registered on or after 7 December 2015.
- a tax exemption for part of the capital gain or income from the disposal of investments that accrued to the end of the period ending six months after the end of an income year in which the investee’s has first exceeded $250 million.
The ESVCLP tax offset is shown at D1 in the Calculation statement.
See also:
Early stage investor tax incentives
From 1 July 2016, investors who acquire newly issued shares in a qualifying early stage innovation company may be eligible for:
- a tax offset equal to 20% of the amount paid for the shares. This tax offset is capped at a maximum amount of $200,000 for each income year for the investor and their affiliates combined. The offset is not refundable, however can be carried forward to the next income year.
- a modified CGT treatment under which the investor can disregard any capital gains made on the shares that have been continuously held for between one and ten years. Any capital losses on the shares held for less than ten years must also be disregarded.
The early stage investor tax offset is shown at D2 in the Calculation statement.
See also:
Transitional CGT relief
Transitional CGT relief is available for funds to provide temporary relief from certain capital gains that might arise as a result of complying with the transfer balance cap, and transition-to-retirement income stream (TRIS) reforms, commencing on 1 July 2017. It applies to certain CGT assets held by a complying fund at all times between the start of 9 November 2016, to immediately before 1 July 2017.
CGT relief is not automatic; it must be chosen by a trustee for a CGT asset. If CGT relief is chosen, the trustee will need to advise the ATO in the CGT schedule on, or before, the day they are required to lodge their fund’s 2016–17 income tax return. The decision is irrevocable.
Significant Global Entity (SGE)
The significant global entity (SGE) concept is used to give clarity to taxpayers about whether they are within the scope of the measures to which the definition applies.
The concept of SGE was introduced as part of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 legislation which contains a package of measures announced as part of the 2015-16 Budget. These measures focus on combating multinational tax avoidance.
An entity is an SGE if it is:
- a global parent entity whose annual global income is A$1 billion or more, or
- a member of a group of entities that are consolidated for accounting purposes as a single group and one of the other members of the group is a global parent entity whose annual global income is A$1 billion or more.
An SGE can be an entity in a group that only has operations in Australia, including those that are privately owned.
To assist in identifying SGEs, from 2016-17 and going forward, entities will be required to self-assess themselves under the definition of a SGE and notify the tax office on their annual income tax return at 'Status of fund or trust' (N item 8).
The SGE concept is part of the following measures:
For more information, see Significant Global Entities.
The Multinational Anti-Avoidance Law (MAAL)
The Multinational Anti-Avoidance Law (MAAL) is part of the government's efforts to combat tax avoidance by multinational companies operating in Australia. The MAAL has been introduced to ensure that multinationals pay their fair share of tax on the profits earned in Australia. It is aimed at SGEs that enter into artificial arrangements to avoid taxation in Australia (or elsewhere) when supplying goods or services to Australian customers.
For more information, see Combating multinational tax avoidance – a targeted anti-avoidance law.
Country-by-Country (CbC) reporting
Country-by-Country (CbC) reporting is part of a broader suite of international measures aimed at combating tax avoidance through more comprehensive information being provided to the ATO to better conduct risk assessments associated with transfer pricing.
The measure takes effect from income years commencing on, or after, 1 January 2016. It requires SGEs to supply the ATO with three statements which will provide a clear overview of its global and Australian operations. This information will be shared with tax authorities in the other jurisdictions in which the group operates. The measure also contains revised standards for transfer pricing documentation.
For more information, see Country-by-Country reporting.
Increasing administrative penalties for SGEs
On 3 May 2016, the government announced the 'Tax integrity package – increasing administrative penalties for significant global entities' measure. This measure applies to conduct occurring from 1 July 2017.
Administrative statement penalties will be doubled. This increases the penalties imposed on SGEs that do not take reasonable care, take a tax position that is not reasonably arguable, or fail to provide documents when required and the Commissioner determines the liability without the document.
Failure to lodge on time (FTL) penalties for SGEs will be increased. The base penalty amount will be multiplied by 500 if the entity concerned is an SGE.