Disclosure of business tax debt
On 28 October 2019, the Disclosure of Business Tax Debt measure received Royal Assent allowing the Australian Taxation Office (ATO) to disclose tax debt information of businesses to registered credit reporting bureaus (CRBs). Under this law, the ATO will only be able to disclose tax debt information of a business that is within a declared class of entities, and where certain criteria are met. The criteria and declared class of entities are set out in the legislative instrument which was registered on 23 December 2019 with a commencement date of 21 February 2020. An entity that is a complying superannuation fund is specifically excluded from the declared class of entities. The Commissioner is not obliged to disclose tax debt information and will apply administrative safeguards above and beyond the legislative safeguards before reporting the tax debt information of a business.
For more information, see Disclosure of business tax debts.
Hybrid mismatch rules - foreign income or losses
The hybrid mismatch rules are designed to prevent entities from gaining an unfair competitive advantage through hybrid mismatch arrangements. Generally, these arrangements exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.
These rules have been legislated in the following Australian income tax law:
- Division 832 of the ITAA 1997
- related amendments to the ITAA 1997 (which includes amendments affecting Division 207 franking entitlements
- related amendments to the ITAA 1936.
These rules operate in Australia to neutralise hybrid mismatches by disallowing deductions or including amounts in assessable income.
Effective dates:
- Division 832 of the ITAA 1997 has an effective start date for income years beginning on or after 1 January 2019, with the exception of certain aspects of the imported mismatch rules.
- The related measures referred to above have effect for distributions received and flows occurring on or after 1 January 2019, apart from particular transitional measures applying to certain distributions received in relation to Additional Tier 1 capital instruments that have been issued by certain financial or insurance institutions.
For more information, see Hybrid mismatch rules.
Removal of death benefit increase deduction
From 1 July 2019, the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 removed the death benefit increase deduction. From 1 July 2019, this deduction is no longer available.
Non-arm's length expenses (NALE)
The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2024External Link amends the rules for NALE for superannuation entities.
Under the amendments, from 1 July 2018:
- for APRA regulated funds with no more than 6 members (small APRA funds), the amount of non-arm's length income (NALI) arising from a NALE that is a general expense (also referred to as 'non-arm's length general expense') will be twice the difference between the expense that the entity did incur (including nil expenditure) and the amount that might have been expected to be incurred. This is the 'Twice the difference approach'.
- for APRA regulated funds with more than 6 members (large APRA fund), exempt public sector superannuation funds, pooled superannuation trusts (PSTs) and approved deposit funds (ADFs), will be exempt from the NALI rules arising from NALE for both non-arm's length general and specific expenses. However, they will still be subject to the remaining non-arm's length income rules for income derived on a non-arm's length basis.
- for all superannuation entities, the NALE rules don't apply to expenditure incurred or expected to have been incurred before 1 July 2018.
Stapled structures
Measures have been introduced to address risks posed by arrangements involving stapled structures, and to limit access to concessions available to foreign investors for passive income. A stapled structure is an arrangement where two or more entities that are commonly owned (at least one of which is a trust) are bound together, such that interests in them (for example, shares or units) cannot be bought or sold separately.
For more information, see Stapled structures.
Continue to: Completing the fund income tax return.