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A new Federal Government typically brings with it a new tax agenda, and this time around is no different. The Federal Government has made it clear that its taxation priorities relate to multinationals, and this has been reflected in the October 2022 Federal Budget. In this section of our updated 2022-23 Federal Budget tax analysis, we reflect on the forward agenda for tax measures under the current Government, and consider the status of announced but unenacted measures from previous Governments.
In addition to the new and updated measures discussed in other parts of our analysis, the Government has already commenced its path to implement a number of other tax-related election commitments, as well as subsequent announcements. These include:
- tax concessions for electric vehicles, with legislation currently before Parliament seeking to introduce a Fringe Benefits Tax (FBT) exemption for certain zero or low emissions vehicles, and customs duty already removed (from 1 July 2022) for the importation of such vehicles
- reforms relating to the Safeguard Mechanism intended to help industry reduce emissions in line with Australia's climate targets, including a proposal to treat a new unit type, Safeguard Mechanism Credit, as registered emissions units for tax purposes, and
- clarifying the law to ensure that cryptocurrencies are not treated as foreign currency for tax purposes.
In a welcome move, we have seen the new Government take stock of some of the previously announced but unenacted measures from previous Governments. This is an important part of the changeover from one Government to the next that ensures that taxpayers have certainty regarding tax law changes, particularly for those with an intended start date that has passed. As part of this October 2022 Federal Budget, the Government has indicated its intentions with respect to some of the previously announced but unenacted measures.
Table 1 below sets out key previously announced measures that will proceed under the current Government. Some of these have already progressed since the May 2022 election, with draft legislation released for consultation, and/or the measures re-introduced into Parliament.
Table 1: Previously announced measures that will proceed
| Measure | Description |
|---|---|
| Small business technology investment boost | An additional 20 per cent deduction for small businesses for the cost of eligible business expenditure and purchases of depreciation assets that support their adoption of new digital technology from 7:30pm (AEDT) on 29 March 2022 until 30 June 2023. Expenditure up to $100,000 will be eligible for the boost. Draft legislation for this measure was released for consultation in August 2022. |
| Small business skills and training boost | An additional 20 per cent deduction for small businesses for the cost of external training courses provided to employees from 7:30pm (AEDT) on 29 March 2022 until 30 June 2024. Draft legislation for this measure was released for consultation in August 2022. |
| Sharing economy reporting regime | A new reporting regime for operators of electronic distribution platforms will require them to report to the Australian Taxation Office (ATO) for data matching purposes information regarding participating sellers for transactions that relate to a supply connected to Australia of:
Legislation for this measure was introduced into Parliament in August 2022 with the start dates deferred for one year as noted above. |
| Removing the ability to frank dividends funded by capital raisings | This integrity measure, initially announced in 2016, will remove the ability to frank dividends that are funded by capital raising. This measure is proposed to apply to distributions made after 12:00 pm (AEDT) on 19 December 2016. Disappointingly, there was no change to the start date for this measure announced in this Budget. Draft legislation for this measure was released for consultation in September 2022. |
| Reducing the compliance burden of FBT record keeping | This measure will provide the Commissioner of Taxation with the power to make determinations which will allow employers to rely on existing corporate records, rather than specific employee declaration and other prescribed records, for FBT purposes. Draft legislation for this measure was released for consultation in September 2022. |
| Expanding the tax treaty network | The current Government has continued this focus, with the recent announcement of the signing of a new tax treaty with Iceland, with no doubt more announcements yet to come. |
| Reducing compliance costs for individuals claiming self-education expense deductions | The $250 non-deductible threshold for self-education expenses will be removed. Legislation for this measure was introduced into Parliament in August 2022. |
| Taxation of income of Indian firms providing technical services to Australian customers | This measure, which was announced as part of the Australia-India Economic Cooperation and Trade Agreement in April 2022, will see amendments to Australia’s domestic tax law to stop the taxation of income of non-resident Indian firms providing technical services remotely (not through a permanent establishment) to Australian customers. Legislation for this measure was introduced into Parliament in September 2022. |
| Residency requirements for SMSFs | The proposal to relax residency requirements for SMSFs was originally expected to apply from 1 July 2022. This start date has now been deferred to the income year commencing on or after the date of Royal Assent of the enabling legislation. See the Personal tax and superannuation section for further details. |
| Technical amendments to the Taxation of financial arrangements (TOFA) provisions | Technical amendments announced in the 2021-22 Budget will proceed, with the start date to be deferred from 1 July 2022 to the income year commencing on or after the date of Royal Assent of the enabling legislation. This includes amendments to facilitate access to hedging rules on a portfolio basis, and amendments to reduce compliance costs and correct unintended outcomes in relation to foreign exchange gains and losses. |
The Government has announced that the key measures set out in Table 2 below will not proceed.
Table 2: Previously announced measures that will not proceed
| Measure | Description |
| Self-assessment of intangible asset effective lives | Measure to allow taxpayers to self-assess the effective life of intangible depreciating assets previously announced in the 2021-22 Budget. Effective lives of intangible depreciating assets will continue to be set by statute. Refer to the Business section for further details. |
| Debt/equity tax rules | Measures were proposed to amend certain integrity provisions contained in the debt/equity tax rules. |
| Removing barriers to asset backed financing | The 2016-17 Budget measures proposed to remove key barriers to the use of asset backed financing arrangements, such as deferred payment arrangements and hire purchase arrangements. |
| Limited partnership collective investment vehicles | The 2016–17 Budget measure that proposed introducing a new tax and regulatory framework for limited partnership collective investment vehicles. |
| TOFA amendments | These proposals, which were originally put forward in the 2016–17 Budget, were intended to reduce the scope, decrease compliance costs and increase certainty through the redesign of the TOFA framework. |
The new Government has taken its first welcome steps in reducing the list of previously announced but enacted measures. Unfortunately, there still remain several tax measures outstanding with no indication of whether the current Government intends to proceed with them, including the previously announced introduction of a patent box regime in Australia, changes to the tax residency rules for individuals and companies, digital games tax offset, non-arm’s length income and expenditure rules for super funds and reforms to Division 7A (relating to private company deemed dividends).
In addition to this ambitious agenda, the Government also has the Board of Taxation working on its review of the tax treatment of digital assets and transactions in Australia, and has yet to respond to previous reviews including the review of capital gains tax (CGT) roll-overs.
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