• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/11/2013

Australia - GST on fees; withholding tax on interest 

November 11: The KPMG member firm in Australia prepared reports on the following developments (read the November 2013 reports by clicking on the hyperlinks provided below):
  • GST on fees and charges - In a recent GST Determination (GSTD 2013/1), the Commissioner ruled that a “failed payment fee” charged by a supplier is not consideration for a supply. The Commissioner had previously characterised a failed payment fee as consideration for an input taxed supply. The changed position is based on a recognition that there is insufficient nexus between the failed payment fee and the underlying supply (i.e., the supply in respect of which the payment failed).

    Read a November 2013 report

  • Australia’s interest withholding tax regime - Concerning the Australian withholding tax regime and interest paid by foreign bank branches, the current level of withholding tax is seen as an impediment to the access of offshore capital because of inconsistencies in levying interest withholding tax on offshore borrowings. Further, the interest withholding tax costs are usually passed on to borrowers increasing the cost of borrowing for non-residents.

    Read a November 2013 report

  • Encouraging investment in Australia - The government announced that it wishes to encourage foreign investment in Australia. One way to achieve this is to implement previous recommendations of the Board of Taxation on the taxation arrangements for managed investment trusts (MITs) to address the restrictions of investors using unit trusts and MITs for infrastructure and property investments.

    Read a November 2013 report

  • Asian Region Funds Passport: Opportunities for Australian fund managers - The Asian Region Funds Passport initiative—of interest to Australian fund managers looking to tap into the multi-trillion dollar pool of savings across the Asia Pacific region—will allow fund managers based in one participating country to market their funds in other member countries, subject to an agreed set of regulations. The program is based on the mutual recognition and trust of the legal framework for funds in each participating country. Special passport rules also apply to streamline the regulatory process in terms of fund authorisation, types of legal vehicles that can be offered, investment and portfolio allocation restrictions and other areas.

    Read a November 2013 report

  • Outlook for MRRT repeal - The view of tax professionals in Australia is that draft legislation to repeal the mineral resource rent tax (MRRT), effective from 1 July 2014, is unlikely to pass the Labor and Greens controlled Senate before 1 July 2014. Instead, it is believed that the passage of legislation will have to wait until after 1 July 2014 when the composition of the Senate will change, with likely supporters of this repealing legislation.

    Read a November 2013 report

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