Authors: Linda Daniele, Editor of the Australian Income Tax Legislation 2016 – Tax Year End
To celebrate the release of the CCH Books: Tax Year End Catalogue, our specialists are penning a series of articles to give you insight into the top changes taking effect in the taxation landscape.
Set out below is an overview of major Income Tax Legislation changes effective since 1 January 2016.
Tax Laws Amendment (Small Business Restructure Roll-over) Act 2016
No 18 of 2016, assented to 8 March 2016 and effective from 1 April 2016
- The Act makes amendments to provide greater flexibility for small businesses owners to change the legal structure of their business.
- It provides a new roll-over to make it easier for small business owners to restructure by allowing them to defer gains or losses that would otherwise be made from transferring business assets from one entity to another as part of a genuine restructure.
Tax Laws Amendment (Implementation of the Common Reporting Standard) Act 2016
No 23 of 2016, assented to 18 March 2016 and effective from 19 March 2016
- The Act requires certain financial institutions (FI) to report information to the ATO about financial accounts held by foreign tax residents.
- The purpose of the Common Reporting Standard is to help participating states address tax evasion by exchanging financial account information between tax authorities.
Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016
No 53 of 2016, assented to and effective from 5 May 2016
- The Act gives effect to a new tax system for certain managed investment trusts (MITs) for income years starting from 1 July 2016.
Tax and Superannuation Laws Amendment (2015 Measures No 6) Act 2016
No 10 of 2016, assented to 25 February 2016 and effective from 26 February 2016
- The Act makes amendments to change the capital gains tax (CGT) treatment of the sale and purchase of businesses involving certain earnout rights — rights to future payments linked to the performance of an asset or assets after sale.
- As a result of these amendments, capital gains and losses arising in respect of look-through earnout rights will be disregarded.
- Instead, payments received or paid under the earnout arrangements will affect the capital proceeds and cost base of the underlying asset or assets to which the earnout arrangement relates.
- The Act also introduces a new regime imposing withholding obligations on the purchasers of certain Australian assets. The purpose of the regime is to assist in the collection of foreign residents’ capital gains tax.
Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Act 2015
No 53 of 2015, assented to 26 May 2015 and effective from 1 July 2016
- The Act makes amendments to remove an income tax exemption available to Norfolk Island residents, companies and trustees on income sourced from Norfolk Island and outside Australia and to remove the full exemption from the Medicare levy for residents.
Education Legislation Amendment (Overseas Debt Recovery) Act 2015
No 154 of 2015, assented to 26 November 2015 and effective from 1 January 2016
- The Act makes amendments to ensure that overseas HELP or TSL debt repayments are not allowable self-education expenses for Australian income tax purposes.
Labor 2013-14 Budget Savings (Measures No 2) Act 2015
No 169 of 2015, assented to 11 December 2015 and effective from 1 January 2016
- The Act makes amendments to replace the current student start-up scholarship with an income-contingent loan, the student start-up loan (SSL).
Rates, Thresholds and Offsets for 2016/17
The key superannuation rates and thresholds for the 2016/17 year will be updated in CCH Notes to the legislation, as well as the Dependant (Invalid and Carer) Tax Offset (DICTO).
Key rates and thresholds include:
- Concessional contributions cap
- Non-concessional contributions cap
- Capital Gains Tax (CGT) cap amount for non-concessional contributions
- Superannuation benefit caps
- Employment termination payments (ETP) cap amount
- Tax-free part of genuine redundancy payments and early retirement scheme payments
- Dependant (Invalid and Carer) Tax Offset (DICTO)
The Australian Income Tax Legislation 2016 – Tax Year End is your comprehensive consolidation of Australian income tax and related legislation, and will be updated for all amendments to 30 June 2016, covering all the changes highlighted in this article and more.