What’s new?
Cessation of the temporary budget repair levy
Various rates of tax that apply to superannuation entities have been decreased in line with the cessation of the temporary budget repair levy which was payable by some individuals for 2014–15, 2015–16 and 2016–17. Rates affected include those that apply to the taxable income of non-complying superannuation funds and non-complying approved deposit funds (ADFs) (47% to 45%) and the non-arm’s-length component of the taxable income of a superannuation fund, ADF or PST (47% to 45%).
Transitional CGT relief realisation event
Transitional CGT relief was available in 2016–17 for superannuation funds and pooled superannuation trusts to defer the recognition of certain capital gains that might arise as a result of individuals complying with the transfer balance cap and Transition-to-retirement stream (TRIS) reforms. A previously deferred capital gain is recognised where:
- the relief was chosen in 2016–17
- the fund notified the ATO as required via the Capital gains tax schedule 2017, and
- the fund has a realisation event during 2017–18.
A new item has been added to the Capital gains tax schedule 2018 to recognise the previously deferred capital gain. A superannuation fund (or pooled superannuation trust) must now use the schedule where the entity has recognised a previously deferred capital gain.
Exempt current pension income (ECPI) and Transition-to-retirement income streams (TRIS)
From 1 July 2017, superannuation funds can only claim exempt current pension income where the current pension liabilities relate to the payment of retirement phase superannuation income stream benefits.
This means funds will have to pay tax on the earnings from assets supporting a TRIS where the recipient is under 65 and has not notified the fund they have met a condition of release with a nil cashing restriction (retirement, terminal medical condition or permanent incapacity).
Deferred superannuation income streams
From 1 July 2017 funds are able to claim exempt current pension income (ECPI) for current pension liabilities relating to certain deferred superannuation income streams where the intended recipient has met a condition of release with a nil cashing restriction (retirement, terminal medical condition, permanent incapacity or 65 years old or older).
For more information, see Innovative retirement income stream for APRA funds
Removal of the deduction for death benefit increase
From 1 July 2017, the deduction for amounts of increased superannuation lump sum death benefits will be removed in certain circumstances.
If a member died on or before 30 June 2017, the superannuation fund may still be eligible to claim a deduction provided the fund pays the benefit before 1 July 2019.
From 1 July 2019, the deduction is no longer available.
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 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 entities must 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.