No.004
Thursday, 16 February 2006
GOVERNMENT INTRODUCES FURTHER IMPROVEMENTS TO THE TAX SYSTEM
The Minister for Revenue and Assistant Treasurer today introduced legislation
to implement a range of changes and improvements to Australia’s taxation
system. This Bill will amend the taxation laws to:
Deter the promotion of tax avoidance and evasion schemes:
These measures give effect to the Government’s commitment to introduce
civil penalties and other remedies to deter the promotion of tax avoidance and
tax evasion schemes, while allowing flexibility for legitimate tax planning.
Legitimate tax effective investments, including schemes that have a Product
Ruling from the Commissioner of Taxation and are implemented in accordance with
that ruling, will not be at risk under the regime.
The framework provides a combination of preventative measures and deterrents.
Under previous legislative arrangements, promoters of tax exploitation schemes
were not penalised when taxpayers incurred penalties for their involvement in
tax avoidance and tax evasion schemes.
There has been extensive consultation with industry and the tax professionals
in developing the legislation.
From 1 July 2005, provide a systematic treatment for business ‘blackhole’
expenditures comprising:
- a new five-year write-off for business capital expenditure not recognised
elsewhere in the tax law. This includes pre- and post-business expenses;
- expanding the cost base and reduced cost base for capital gains tax (CGT)
assets;
- expanding the elements of cost for depreciating assets; and
- a new five-year write-off for lease and licence surrender payments incurred
in carrying on or in ceasing a business.
The goods and services tax (GST) and phone vouchers:
The Government will give effect to its announcement in the 2005-06 Budget that
it will amend the vouchers provisions in the GST law to clarify that prepaid
phone products are treated as ‘eligible vouchers’. Under the GST
law, these vouchers are taxed on redemption rather than on their sale. This
will have effect from 1 July 2000.
Enhance the foreign income tax exemption for temporary residents:
The Treasurer announced several improvements to this measure to make it more
effective and to significantly reduce administrative and compliance costs –
for more information see the Treasurer’s press release.
Media Contact: Brad Emery 02 6277 7360 – 0414 225 638