Explanatory Memorandum
(Circulated by authority of the Minister for Housing and Assistant Treasurer the Hon. Michael Sukkar MP)General outline and financial impact
Thin capitalisation
Schedule 1 to this Bill amends the ITAA 1997 to tighten Australia's thin capitalisation rules by:
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- requiring an entity to use the value of the assets, liabilities (including debt capital) and equity capital that are used in its financial statements;
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- removing the ability for an entity to revalue its assets specifically for thin capitalisation purposes; and
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- ensuring that non-ADI foreign controlled Australian tax consolidated groups and multiple entry consolidated groups that have foreign investments or operations are treated as both outward investing and inward investing entities.
Date of effect: The amendments relating to the valuation of assets, liabilities (including debt capital) and equity capital generally apply from 7.30 pm by legal time in the Australian Capital Territory, on 8 May 2018.
The amendments relating to non-ADI foreign controlled Australian tax consolidated groups and multiple entry consolidated groups apply to income years beginning on or after 1 July 2019.
Proposal announced: This Schedule fully implements the measure 'Tax integrity - thin capitalisation - valuation of assets and treatment of consolidated entities' from the 2018-19 Budget.
Financial impact: As at the 2018-19 Budget, the measure is estimated to have a gain to revenue of $240.0 million over the forward estimates period comprising:
| 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| - | - | - | $120.0m | $120.0m |
- Nil
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.1 to 4.4.
Compliance cost impact: Minimal.
Online hotel bookings
Schedule 2 to this Bill requires offshore suppliers of rights or options to use commercial accommodation in Australia to include these supplies in working out their GST turnover.
Date of effect: These amendments apply in relation to supplies where consideration is first received, or before consideration is received an invoice is issued, on or after 1 July 2019.
Proposal announced: This Schedule fully implements the measure 'levelling the playing field for online hotel bookings' from the 2018-19 Budget.
Financial impact: As at the 2018-19 Budget, the measure is estimated to result in a gain to GST revenue of $15.0 million over the forward estimates period comprising:
| 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| - | - | $5.0m | $5.0m | $5.0m |
- Nil
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.5 to 4.8.
Compliance cost impact: Low.
Removing luxury car tax on re-imported cars refurbished overseas
Schedule 3 to this Bill removes liability for luxury car tax from cars that are re-imported following service, repair or refurbishment overseas.
Date of effect: The amendments apply to importations made on or after 1 January 2019.
Proposal announced: This Schedule fully implements the measure 'removing luxury car tax on re-imported cars following refurbishment overseas' from the 2018-19 Budget.
Financial impact: As at the 2018-19 Budget, the measure is estimated to have a negligible cost to revenue over the forward estimates period, comprising:
| 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| - | .. | .. | .. | .. |
- Nil .. not zero but rounded to zero
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.9 to 4.12.
Compliance cost impact: Nil.