Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)General outline and financial impact
Schedule 1 - Toughening the multinational anti-avoidance law
Schedule 1 to this Bill amends the ITAA 1936 to ensure that the multinational anti-avoidance law applies appropriately to artificial or contrived arrangements involving trusts and partnerships entered into by multinational entities to avoid the taxation of business profits in Australia.
Date of effect : This measure applies on or after 1 January 2016 in connection with a scheme, whether or not the scheme was entered into, or was commenced to be carried out, before that day.
However, the measure does not apply in relation to tax benefits that a taxpayer derives before 1 January 2016.
This is consistent with the date from which the multinational anti-avoidance law applied.
Proposal announced : This Schedule implements the measure 'Tax Integrity Package - toughening the multinational anti-avoidance law' announced in the 2017-18 Budget.
Financial impact : The measure is estimated to result in an unquantifiable gain to revenue over the forward estimates period, comprising:
| 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 |
| * | * | * | * | * |
* Unquantifiable
Human rights implications : This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - in Chapter 5, paragraphs 5.1 to 5.4.
Compliance cost impact : The compliance cost impact of this measure is low - it only affects taxpayers engaged in multinational tax avoidance schemes.
Schedule 2 - Improving the integrity of the small business CGT concessions
Schedule 2 to the Bill amends the ITAA 1997 to include additional conditions that must be satisfied to apply the small business CGT concessions to capital gains. The new conditions ensure that the small business CGT concessions in Division 152 of the ITAA 1997 are only available for CGT assets that are either used or held ready for use in the course of a small business or are an interest in a small business.
Date of effect : The amendments apply to CGT events that occur on or after 1 July 2017.
Proposal announced : These amendments implement the measure announced in the 2017-18 Budget as 'Tax Integrity Package - improving the small business capital gains tax concessions'.
Financial impact : This measure is estimated to have an unquantifiable gain to revenue over the forward estimates period comprising:
| 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 |
| - | - | * | * | * |
- Nil
* Unquantifiable
Human rights implications : This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - in Chapter 5, paragraphs 5.5 to 5.8.
Compliance cost impact : This measure is expected to have minimal regulatory impact.
Schedule 3 - Fintech and venture capital amendments
Schedule 3 to the Bill amends the income tax law and the Venture Capital Act 2002 to ensure that the venture capital tax concessions are available for investments in fintech businesses.
Date of effect : These amendments apply in relation to investments made on or after 1 July 2018.
Proposal announced : This Schedule partially implements the measure "National Innovation and Science Agenda - expanding the new arrangements for venture capital limited partnerships" from the 2016-17 Budget.
Financial impact : The 2016-17 Budget measure "National Innovation and Science Agenda - expanding the new arrangements for venture capital limited partnerships" is estimated to have an unquantifiable cost to revenue over the forward estimates period. This Schedule implements part of this announced measure.
Human rights implications : This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - in Chapter 5, paragraphs 5.9 to 5.12.
Compliance cost impact : These measures are expected to result in a small overall compliance cost impact, comprising a small implementation impact and a small increase in ongoing costs.
Schedule 4 - Tax exemption for payments made under the Defence Force Ombudsman Scheme
Schedule 4 to this Bill amends the ITAA 1997 to exempt from income tax, payments received from the Commonwealth as reparation for abuse by Australian Defence Force personnel.
Date of effect : This measure applies to the 2017-18 income year and later income years.
Proposal announced : This Schedule implements the tax consequences from the 2017-18 Budget of the Defence Force Ombudsman - continuation and expansion measure.
Financial impact : Nil.
Human rights implications : This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - in Chapter 5, paragraphs 5.13 to 5.16.
Compliance cost impact : Nil.