Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Thin capitalisation
Amendments 1 to 5, 8 and 9 amend Schedules 1 and 2 to the bill to ensure that the amendments to Division 820 (thin capitalisation rules) of the ITAA 1997 have their intended effect. Amendments 6 and 7 address issues identified in the application of the thin capitalisation rules.
Date of effect: The amendments to Schedule 1 will apply from the start of a taxpayer's first income year commencing on or after 1 July 2001. Amendments to Schedule 2 will apply for income years commencing on or after 1 July 2002.
Proposal announced: Not previously announced.
Financial impact: Nil.
Compliance cost impact: The amendments will not affect compliance costs.
Reducing tax on the excessive component of eligible termination payments
Amendments 10 to 13 amend Schedule 6 to the bill to ensure that the measure to reduce the effective rate of tax on the excessive component of an ETP paid by a superannuation fund will apply to an excessive component of a death benefit paid to a dependant of a deceased fund member, as was intended.
Date of effect: These amendments will apply to ETPs made on or after 1 July 2002.
Proposal announced: Not previously announced.
Financial impact: Nil.
Compliance cost impact: The amendments will not affect compliance costs.
Tax losses - consequential amendments to the consolidation provisions
Amendments 14 and 15 amend Schedule 8 to the bill to ensure that allowing corporate tax entities to choose the amount of prior year losses to deduct in a later year of income does not have unintended consequences for the consolidation loss rules.
Date of effect: 1 July 2002.
Proposal announced: The measure to allow corporate tax entities to choose the amount of prior year losses to deduct in a later year of income was announced in the 2002-2003 Federal Budget on 14 May 2002.
Financial impact: These are consequential amendments to the consolidation provisions and are not expected to have a revenue impact.
Compliance cost impact: These amendments are not expected to impact on compliance costs.
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