Global

Details

  • Service: Tax, Global Indirect Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/27/2014

Australia - Tax consolidation, security for taxes, dividend exemption rules 

May 27:  The KPMG member firm in Australia prepared reports on the following developments (read the May 2014 reports by clicking on the hyperlinks provided below):
  • Tax consolidation changes - A “new normal” concerning Australian tax is a need to focus on tax changes affecting foreign-owned Australian tax consolidated groups. There were a number of tax measures affecting corporate groups within a few press releases and Treasury papers.

    Read a May 2014 report.


  • Non-residents beware - Observers have noticed an increase in the issue of notices by the Commissioner to non-residents requiring them to provide security for future tax debts—in particular, when the non-resident is selling Australian property or shares in Australian companies.

    Read a May 2014 report.


  • Who would come to tax for innovation? To answer this question, consider that: (1) tax people are increasingly future focused—helping businesses to explore options and successfully navigate off-piste responding to new ventures, technology-trends, partnerships and business models); (2) tax people are multi-disciplinary and are “translators” (between business initiatives and financial imperatives); and (3) tax people help fund projects.

    Read a May 2014 report.


  • A tax by any other name - With this year’s budget, it would appear that increasing goods and services tax (GST) collections would seem to be an obvious choice, given the current rate of 10% lags behind the Organisation for Economic Co-operation and Development (OECD) average rate of GST (VAT) which is about 19%. Consideration could be given by the government to broadening the GST base by applying GST to things like fresh food and health services.

    Read a May 2014 report.


  • Section 23AJ reforms - The government released Exposure Draft legislation regarding changes to non-portfolio dividend exemption rules, with submissions due by 6 June 2014. The non-portfolio dividend exemption reforms were in response to perceived abuses arising from the debt/equity tax rules not being applied to the pre-existing section 23AJ dividend exemption, which instead relied on voting power attaching to legal form shares. This disconnect allowed for returns on debt interests, such as redeemable preference shares issued by foreign subsidiaries to Australian companies continuing to be treated as non-assessable non-exempt “dividends” and also the debt interest itself being controlled foreign entity debt for thin capitalisation purposes. The alignment of the non-portfolio dividend exemption to the debt/equity tax rules would prevent this perceived abuse, while conversely allowing for non-share equity interests to now qualify for the non-portfolio dividend exemption.

    Read a May 2014 report.


  • Funding productivity projects through the Emissions Reduction Fund - With the release of the Emission Reduction Fund (ERF) White Paper, the program was announced as part of the 2014/15 federal budget. The ERF is proposed policy to reduce Australia’s emissions and will replace the Carbon Pricing Mechanism. Many companies may see this as yet another major change to compliance, reporting and carbon emission “penalties.” However, there are opportunities to use the ERF to fund major business critical projects.

    Read a May 2014 report.


  • Corporate tax rate and PPL changes - One budget measure is the proposed reduction in the corporate tax rate to 28.5% for income years commencing on or after 1 July 2015. Companies also would be subject to a new paid parental scheme levy (PPL) of 1.5% on taxable income in excess of $5 million. There are a number of issues that need careful consideration.

    Read a May 2014 report.



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