I am just starting here, so we are playing catch-up with the following tax enquiries which are presently open to submissions:
The Assistant Treasurer has an open invitation to submit on Australia’s tax treaty policy:
“The Government is committed to ensuring Australia’s tax treaties remain relevant to evolving business directions,” Mr Bowen said.
“In setting the future direction for Australia’s tax treaties we are interested in hearing from the public on which countries Australia should be negotiating with and the key outcomes we should be seeking with those countries.”
Public submissions are particularly invited on:
- the countries with which it may be desirable to negotiate or update a tax treaty
- the appropriateness of Australia’s tax treaty policy and drafting approaches as reflected in recent treaties.
The only treaty I am currently aware of which is under renegotiation is NZ, but submissions have closed on this one. Australia has recently re-negotiated treaties with France, Finland, Japan and South Africa (RSA via an amending protocol not a full-blown new treaty). Interested parties should be aware that there is a fundamental distinction in Australian tax treaty policy between US/UK treaties and ‘rest-of-the-world’ treaties, and that the trend is towards both restricted taxing rights of the source country and lower maximum tax rates.
The Board of Tax is conducting an enquiry into Managed Investment Funds:
On 22 February 2008 the Assistant Treasurer announced that he had asked the Board of Taxation to undertake a review of the tax arrangements applying to managed funds that operate as managed investment trusts.
which is somewhat hobbled by its guiding principles:
- the tax treatment for trust beneficiaries who derive income from the trust should largely replicate the tax treatment for taxpayers as if they had derived the income directly;
- in recognition of the tax advantages available to trusts that are not available to companies deriving business income, flow through taxation of income from widely held trusts, such as managed investment trusts, should be limited to trusts undertaking activity that is primarily passive investment;
- beneficiaries should be assessable on their share of the net income of a trust whether it is paid or applied for their benefit, or they have a present right to call for immediate payment;
- the trustee should be liable to tax on the net income of the trust that is not assessable to beneficiaries in a particular income year; and
- trust losses should generally be trapped in the trust subject to limited special rules for their utilisation.
which are basically the principles applying to the present system. That’s a little snarky though, because there are genuine gains to be made by improving this area, and the enquiry appears to have a somewhat wider remit than the title suggests, because the rules they are looking at apply to all ‘public’ trusts and not just licenced Managed Investment Schemes and LAPTs.
The biggest gains to be made here are from simpler and easier-to-comply with rules that would allow flow-through taxation for ’substantially’ passive investments as opposed to the present rules which restrict flow-through treatment to solely passive investments only.
The Board of Tax is also conducting a review into the foreign income anti-deferral rules which I will post separately on.
The Assistant Treasurer has also announced an outline of the proposed new rules for ’scrip-for-scrip’ transactions, including the teaser that ‘further consultation will be undertaken with the private sector’. In case you were wondering, they won’t be listening to your submission.
The ATO always has draft rulings and such like open for comments, on which I will try and catch up soon.
