Australia

Details

  • Service: Tax, Corporate Tax
  • Type: Regulatory update
  • Date: 21/05/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Neil Billyard

Neil Billyard
Partner, Tax

+61 2 9335 8235

nbillyard@kpmg.com.au

Anti-Deferral Review – 7 years on 

by Neil Billyard, Financial Services Specialist

The Anti-deferral review commenced with The Board of Taxation in 2006. Legislation was due to apply from 1 July 2013, although this is extremely unlikely given current government priorities and the upcoming Federal Election.

Further, it is quite possible that the work-to-date on these amendments may need to be reconsidered by a future Parliament having regard to the Base Erosion and Profit Shifting consultation announced on 3 May 2013.

 

Whilst other countries such as the UK have sought to simplify and lessen the impact of their Controlled Foreign Corporation (CFC) rules with a view to encourage domestic businesses expanding offshore, Australian business continues to deal with legislation written in the mid 1980s and last reviewed and amended in 2004.

 

As a consequence these rules continue to be out of line with foreign trends and also with domestic tax concepts including the operation of the Debt/Equity Rules and interaction with the Thin Capitalisation rules (changes announced in the 2013 Federal Budget). 

 

As Australian corporates come out of hibernation and start to re-consider foreign acquisitions, they will need to consider the interplay of these inconsistent pieces of legislation whilst having one eye on possible amendments which are likely to come into existence at some undefined future point in time.

 

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