The Australian Government continued its attack on Multinational Tax Avoidance with the release of its 2016-2017 Federal Budget. Central to its Budget initiatives is the introduction of a 40% Diverted Profits Tax on large multinationals from 1 July, 2017, akin to the existing UK Diverted Profits Tax.

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Other measures announced impacting on international profit shifting and related activities include:

  • Rules to limit the use of hybrid entities or instruments under two or more tax jurisdictions (anti-hybrid rules)
  • Further alignment of Australia's Transfer Pricing (TP) rules with International / Organisation for Economic Co-operation and Development (OECD) best practice
  • Establishment of a new Tax Avoidance Taskforce, with 390 new specialised officers
  • New enhanced protections for whistleblowers who disclose information about tax misconduct to the ATO, and
  • Increased administrative penalties for Significant Global Entities with global revenues of AUD $1 billion or more.

These measures complement the existing Multinational Anti-Avoidance Law (MAAL) dealing with notional 'permanent establishment' status , and the comprehensive tax transparency and reporting regimes, including recently enacted 'country by country' reporting requirements.

The corporate tax rate will be progressively reduced for small businesses with annual turnover of less than AUD $10 million, initially to 27.5% from 1 July 2016, and ultimately for all companies by 2023 -2024. Further, a target has been set to reduce the corporate tax rate to 25% over 10 years.

Most importantly, the Government will introduce two new types of Collective Investment Vehicles (CIVs), firstly, a Corporate CIV from 1 July 2017 and secondly, a Limited Partnership CIV from 1 July 2018. Generally, these CIVs will be treated as "flow-through" entities for tax purposes provided they are 'widely held' and engage primarily in passive investment, like the existing Managed Investment Trust regime.

Finally and as expected, the Government has tightened various Superannuation concessions.

Diverted Profits Tax - another tax targeting multinationals

The Government released details of a new Diverted Profits Tax (DPT), which  is designed to strengthen the existing efforts by the Government in combating multinational tax avoidance.  This follows the enactment of the Multinational Anti-Avoidance Law (MAAL) which was announced in the 2015-16 Federal Budget, is now law and applies from 1 January 2016.

At the same time as the DPT was announced in the Budget, the Government released a consultation paper for comment on the DPT (comments are due by 17 June 2016).

Broadly, the DPT is aimed at large multinationals where:

  • they shift profits offshore through related-party arrangements; and
  • as a result, the tax bill on the profit shifted is less than 80% of the tax that would otherwise have been paid in Australia; and
  • it is reasonable to conclude that the arrangement is designed to secure a tax reduction and lacks economic substance.

Where the DPT applies, it will impose a penalty tax rate of 40% on profits transferred offshore.

Further, the DPT will provide the Australian Taxation Office (ATO) with greater powers in tackling multinationals who do not co-operate with the ATO on tax avoidance and this includes legislative and administrative powers, including:

  • broadening the ATO reconstruction powers to hypothesise an alternative arrangement on which to assess the diverted profits where a related party transaction is determined to be artificial or contrived;
  • empowering the ATO to issue a DPT assessment rather than the tax being self-assessed by the taxpayer;
  • requiring the DPT to be paid upfront on assessment; and
  • allowing the taxpayer time to refute the assessment under a regulated response schedule, placing the onus on the taxpayers to prove why the DPT should not apply.

The DPT will apply to income years commencing on or after 1 July 2017.

The UK influence

The DPT will be based on the United Kingdom's (UK) DPT which came into effect from 1 April 2015.  Broadly, the UK DPT aimed to counteract arrangements which are designed to avoid a taxable presence in the UK (the first limb) or which prevents companies from creating tax advantages by using transactions or entities that lack economic substance (second limb).

Whilst the MAAL broadly replicates the first limb of the UK DPT, the proposed DPT will be based on the second limb of the UK DPT.

Who will the DPT apply to?

The following flowchart (as extracted from the consultation paper) provides an overview of who is caught by the DPT.

Click here to view flow chart.

Large multinational that is an Australian resident or permanent establishment

Whilst the MAAL is aimed at multinationals which have sought to avoid a taxable presence in Australia, the DPT is aimed at multinationals with a taxable presence in Australia (e.g. a Permanenent Establishment or an incorporated subsidiary) but have sought to avoid Australian taxation by transferring profits, assets or risks offshore through related party transactions that lack economic substance.

Similar to the MAAL, the DPT will apply to "significant global entities", which broadly, have an annual global turnover of AUD 1 billion or more. However, unlike the MAAL, there is a proposed de minimis threshold that will exempt entities with Australian turnover of less than AUD $25 million (calculated on an aggregated basis if there are multiple related Australian entities). This de minimis threshold will not apply where income is artificially booked offshore.

Effective tax mismatch test

The first test will apply if the increased tax liability of the offshore related party attributable to the transaction is less than 80% of the corresponding reduction in the Australian entity's tax liability. Based on the prevailing Australian corporate tax rate of 30%, where the offshore related party is a tax resident of a jurisdiction with a corporate tax rate that is less than 24%, the first test will effectively be met.

The 80% test mirrors the UK DPT which imposes a similar requirement. Based on the prevailing UK corporate tax rate of 20%, in order for this equivalent test to be met, the offshore related party needs to be a tax resident of a jurisdiction with a corporate tax rate that is less than 16%. Other than tax havens, there are not many countries with a corporate tax rate of less than 16%. Therefore, the 80% test would be appropriate for the UK DPT. However, the 80% test may not be appropriate for the Australian DPT since Australia has a high corporate tax rate (it is the seventh highest corporate tax rate in the OECD and is much higher than our Asian counterparts) and there are many countries with corporate tax rate of less than 24%.

Further, the lack of detail in the consultation paper raises several queries: what is the scope of the "Australian and foreign income taxes relevant to the transaction" that will be taken into account? Will this include Australian withholding taxes, or other taxes not specified in the paper such as duty? Further, how are exchange rates and substituted accounting period factored into this calculations?

Insufficient economic substance test

The onus is on the ATO to reasonably conclude that, based on the information available at the time, the transaction was designed to secure the tax reduction. Further guidance is needed on what constitutes "reasonable" for the purposes of this test.

In addition, we understand that from the UK approach, where the non-tax financial benefits of the arrangement exceed the financial benefit of the reduction, the arrangement will be taken to have sufficient economic substance. However, the paper provides no guidance on how non-tax benefits are to be valued for the purpose of comparison.

What happens if the DPT applies?

The DPT will not be self-assessed by the taxpayer. Therefore, if upon review of the taxpayer's affairs, the ATO considers that the DPT applies, the ATO may issue a provisional DPT assessment unless the ATO considers the transaction or arrangement to be low risk. A provisional DPT assessment must be issued by the ATO within 7 years of the taxpayer lodging their tax return (consistent with the current review period for transfer pricing matters).

Thereafter, the taxpayer has 60 days to make representations to correct factual matters only (and not transfer pricing matters).

After considering the taxpayer's representations, if the ATO still considers that the DPT applies, it can issue a final DPT assessment and must do so within 30 days of the end of the representation period.

The DPT charge for the final DPT assessment will be calculated as follows:

  1. Step 1: Calculate the Diverted Profits Amount
    The provisional Diverted Profits Amount will be either:
    • 30% of the transaction expense (in "inflated expenses" cases i.e. where the deduction claimed in Australia is considered to exceed the arm's length amount); or
    • the ATO's best estimate of diverted profits in all other cases
  2. Step 2: Calculate the DPT Charge
    • The DPT charge is equal to 40% of the Diverted Profits Amount.

The DPT charge is paid upfront on assessment i.e. within 21 days of receiving the final DPT assessment. The taxpayer has no right of appeal against the final DPT assessment at this stage.

It appears that the primary purpose of the DPT is to strongly encourage taxpayers to fully disclose all relevant facts relating to multinational group activities and profits in Australia and related jurisdictions.  That is, it is likely that the DPT will not actually be applied in most cases, once a taxpayer has fully disclosed its global operations to the ATO and has satisfied the ATO that the transfer pricing profit levels reported in Australia (whether as filed or as adjusted) are sufficient. Further, the DPT will also encourage the taxpayer to ensure that their transfer pricing documentation is up to date.

Other multinational tax avoidance measures

In addition to the DPT, the Government announced in the Budget further measures aimed at combating tax avoidance by multinational enterprises, as follows.

Anti-hybrid mismatch rules

Australia will implement the OECD's measures in the BEPS Action 2 Final Report to eliminate hybrid mismatch arrangements, taking into account the recommendations in the Board of Taxation's report on the Australian implementation of OECD hybrid mismatch rules.  These rules are to take effect from 1 January 2018, or six months following the Royal Asset of the enabling legislation.

These measures are targeted at arrangements that exploit differences in the tax treatment of instruments or entities in different countries to achieve double non-taxation and/or long term deferral of taxation.  Redeemable preference shares are a common example of such hybrid instruments used in Australia.

Australia is one of the first countries to formally announce the implementation of the measures in the BEPS Action 2 Final Report.  It is noted that the UK released draft hybrid mismatch legislation on 9 December 2015 and the European Commission announced an Anti-Tax avoidance Directive in January 2016 which included measures to prevent multinational enterprises from exploiting hybrid mismatch arrangements. 

Some of the key OECD recommendations in the BEPS Action 2 Final Report, which have been supported by the Board of Taxation, include:

  • Denying a deduction to the payer of an amount to the extent that the recipient does not include that amount in its assessable income.
  • Include an amount in the assessable income of a recipient (which would otherwise not be assessable) to the extent the payer obtains a deduction for that amount.
  • Where there is a double deduction for an outgoing, deny the deduction in the parent jurisdiction.

No draft legislation has been prepared for the Australian anti-hybrid measures at this time.  The Government has requested the Board of Taxation to undertake further work to advise on the implementation of these rules into Australian tax law.

At this time, the Board of Taxation has recommended that there be no grandfathering of existing hybrid arrangements.  Accordingly, taxpayers that currently have hybrid arrangements in place will need to start considering how the proposed anti-hybrid measures may impact on the tax implications of their existing arrangements.  Such taxpayers should also consider the potential costs of (such as break costs) or restrictions on (such as debt covenants) a restructuring of their hybrid arrangements to comply with the proposed anti-hybrid rules.

Tax Avoidance Taskforce

A new Tax Avoidance taskforce will be established to enable the ATO to undertake enhanced compliance activities targeting multinationals, large public and private groups and high wealth individuals.  In particular, the Taskforce will be focussing on compliance with, and enforcement of, the various multinational tax avoidance measures introduced in the Budget and the Multinational Anti-Avoidance Law (MAAL) that was introduced into law on 1 January 2016.  Large multinational taxpayers should expect there to be increased audit and investigation activities by the ATO in respect of these measures.

Strengthening transfer pricing rules

The Government has announced its intention to strengthen Australia's transfer pricing rules and to ensure that these are consistent with the international best practice of focussing on substance over form. Currently, the transfer pricing rules are intended to be interpreted in accordance with the OECD's Transfer Pricing Guidelines released in 2010 (OECD Guidelines). The Government announced that the OECD paper entitled "Aligning Transfer Pricing Outcomes with Value Creation" (2015 Report) issued in October 2015 would be given the same guidance status as the OECD Guidelines within our transfer pricing rules.

This change follows on from Treasury's Consultation Paper regarding cross-border profit allocation and review of transfer pricing rules released in February 2016.

The amendments to the OECD Guidelines in the 2015 Report ensure that transfer pricing outcomes align with value creation of multinational groups by looking at the underlying substance of transactions, especially where intellectual property is involved. Therefore it is important to consider which entity bears the risk of the transaction and which entity derives the actual economic value of the transaction, as opposed to merely looking at the contractual arrangements between those entities. The recent introduction of the County-by-Country reporting regime should have the effect of allowing the ATO to accurately delineate transactions between related entities.

The 2015 Report also placed significant emphasis on intangible property and clarified that determining entitlement to returns from the exploitation of intangibles is not based on the legal ownership of the intangibles. Instead those returns belong to the entities that perform the value-creating functions, specifically the development, enhancement, maintenance, protection and exploitation of those intangibles. Additionally, in respect of hard-to-value intangibles, the 2015 Report indicates that they will be subject to even more extensive analysis to ensure they are priced at arm’s length. Further, a simpler approach was introduced to allocate charges for intra-group services at arm’s length principle which will ensure that compliance costs are proportional to the amount of revenue at risk.

By adopting the 2015 Report, it will bring the Australian transfer pricing regime up to speed with the most current approach. From a practical perspective it means that entities involved in cross-border transactions in Australia must ensure that they are familiar with the principles introduced by the 2015 Report and have the sufficient documentation to support their transfer pricing conclusions.

Better protection for tax whistleblowers

New arrangements will be introduced with effect from 1 July 2018, to give better protection under the law to individuals who disclose information to the ATO on tax avoidance behaviour. No further detail has been released in respect of this measure so far, but the protection will apply to a range of individuals including employees, former employees and advisors.

Increased administrative penalties for significant global entities

Last year's budget introduced the concept of "significant global entities" - an entity that is part of a consolidated accounting group with a global turnover of greater than $1 billion. The Government has dramatically increased the administrative penalties that will apply to such entities where they fail to adhere to their tax disclosure obligations under Australian tax law.

Significant global entities that fail to lodge their tax documents with the ATO will receive a maximum penalty of $450,000, amounting to an increase of 100 times (previously the penalty was $4,500). In addition to this, where a multinational company makes a statement to the ATO that is "reckless" or "careless" the penalties will be doubled. These increased penalties will apply from 1 July 2017.

Ten year enterprise tax plan - Business taxation

The Federal Budget includes a ten year plan designed to encourage Australians to work, save and invest.  It features a number of measures to increase Australia's international competitiveness and encourage investment, including reductions to company and personal income tax rates and various tax law simplification measures.  The implementation of this plan will require a long term commitment from government as well as improvements to the budget position to appear sustainable in the long term. 

The key changes include:

  • Company tax rate: The company tax rate will be reduced over time until, by 2026-27, the company tax rate for all companies will be 25%.  The reduced rate will be phased in over time beginning with a reduction in the tax rate for small businesses only (companies with turnover of less than $10m) to 27.5% from the 2016-17 income year.  This rate will then be phased in for increasingly large companies over time and later reduced to 25%.  Franking credits will be able to be distributed in line with the rate of tax paid by the company making the distribution.  This will bring Australia's company tax rate closer to many other advanced economies.
  • Deductible liabilities: A consolidated group that acquires a subsidiary with deductible liabilities will no longer include those liabilities in the consolidation entry tax cost setting process, thus removing a double tax benefit.  This is a significant change to previous announcements, which required the inclusion of deductible liabilities in the tax cost setting process and in the assessable income of the head company.  As such, the deferred start date to 1 July 2016 is welcome to avoid the retrospective impact of the change but this is likely to trigger a significant number of amended tax returns for completed transactions. Tax consolidation modelling for future transactions will also be affected.
  • Taxation of Financial Arrangements (TOFA): Significant reforms to the TOFA rules are expected, including the removal of the majority of taxpayers from the TOFA rules.  Decreased compliance costs are expected through more closely linking tax with accounting rules, as well as various simplification measures that should also increase certainty.  A new tax hedging regime will also be available, which may address some of the shortcomings with the existing regime and make the tax hedging election under TOFA more widely available.  The changes will apply to income years commencing on or after 1 January 2018.

This is a positive development as the TOFA rules have a far wider scope than originally intended and their complexity has prevented the compliance savings that were originally envisaged.  However, the impact of these changes on existing TOFA elections and positions adopted by taxpayers that will no longer be subject to TOFA is uncertain. 

  • Small business entity turnover threshold: The small business entity turnover threshold will be increased from $2m to $10m from 1 July 2016.  This will allow an additional 90,000 to 100,000 business entities to gain access to small business concessions, such as a lower income tax rate and accelerated depreciation (small business CGT concessions are unaffected).  This may have a number of flow on effects wherever the small business threshold is relied upon, such as eligibility for simplified valuation methods for employee share schemes.
  • Amendments to Division 7A: The rules dealing with certain payments and loans from private companies to their shareholders will be reformed to provide clearer and simpler rules, including a self-correction mechanism for inadvertent breaches, simplified loan arrangements and legislated safe harbour rules.  While the details are not yet known, many of the reforms are consistent with the Board of Taxation's Post Implementation Review of Division 7A.  The changes will apply from 1 July 2018 and should provide greater certainty for shareholders of private companies.
  • Enhanced access to asset backed financing: The Government intends to remove key barriers to the use of asset backed financing, such as hire purchase arrangements.  The tax treatment of asset backed financing arrangements will also be clarified by ensuring they are treated the same way as financing arrangements based on interest bearing loans or investments. These measures are intended to support investment in infrastructure and will apply from 1 July 2018.

Collective Investment Vehicles (CIVs)

As part of the Ten Year Enterprise Tax Plan, the Government will also introduce a new tax and regulatory framework for two new types of CIVs, being a corporate CIV (for income years starting on or after 1 July 2017) and a limited partnership CIV (for income years starting on or after 1 July 2018).  CIVs allow investors to pool their funds and have them managed by a professional funds manager.

This is a significant development intended to enhance the international competitiveness of the Australian managed funds industry by allowing fund managers to offer investment products using vehicles that are commonly used overseas.  The reforms are consistent with recommendations by the Board of Taxation to use overseas practices to inform and amend the design of Australia's suite of CIVs, and also to ensure that investors in these new CIVs are generally taxed as if they had invested directly.  Existing requirements for managed investment trusts will also broadly apply, such as being widely held and engaging in primarily passive investment.

Innovation incentives

The Budget continues the theme in relation to Innovation Incentives which have been previously announced and released in Bill form.  These include a 20% non-refundable tax offset (capped at investments of $1m and offsets of $200,000), CGT exemptions for 10 years and changes to the early stage venture capital limited partnership (ESVCLP) rules.  We comment further on these below:

Tax offset and CGT exemption

In relation to the 20% non-refundable tax offset and a 10 year capital gains tax (CGT) exemption for investors that invest in an 'eligible innovation company' the key criteria for these measures are:

  • Must be an investment in newly issued equity interests (cannot be a transfer of shares or acquired under an employee share scheme);
  • The investor and the company cannot be affiliates (i.e. it is focussed at new investments not new investment rounds from existing investors), and immediately after the issue of the shares, the investor does not hold more than 30% of the equity interests in the company (or in an entity connected with that company);
  • Is available for all kinds of investors (except widely held companies) and can flow through trusts and partnerships to the beneficial owners;
  • Is restricted to a $50,000 investment (and a $10,000 offset) for non-sophisticated 'retail' investors (to protect these types of investors);
  • For the CGT exemption, an investor must have held a qualifying share for greater than 12 months and dispose of the shares within 10 years;
  • Must be in an early stage innovation company (as defined) which includes several tests and broadly, includes being incorporated in the last 3 years, or being incorporated in the last 6 years with total expenses of $1m or less; having total assessable income of $200,000 or less, not being listed, or satisfying a 'points' test or obtaining a ruling from the ATO confirming this status.

ESVCLP concessions

In addition, the Budget comments on further concessions under the ESVCLP regime including:

  • a non-refundable carry-forward tax offset equal to up to 10% for partners investing via ESVCLPs (being 10% of the lesser of the amount paid by the Partner to the ESVCLP in the year, or the Partners' proportional share of the investments made by the ESVCLP in the year);
  • an increase in the allowable fund size from $100 million to $200 million (doubling the investment size of the ESVCLP and applying to all ESVCLPs, no matter when they were registered);
  • a relaxation of the divestiture requirements.  Previously these requirements resulted in mandatory divestment in certain circumstances, such as where the investee company's assets grew to over $250m.  Now the fund can continue to hold the investee company (but the exemption on capital gains is apportioned such that it will be partially exempt in relation to such companies);
  • allowing eligible venture capital investment entities to invest in certain other entities.  Previously there were restrictions for investee companies investing in other companies (i.e. they had to be stand-alone entities); and
  • extending the types of companies that can be eligible investee companies, including FinTech, banking and insurance related activities (noting that this change was not included in the recent Bill but was the subject of a Treasury release dated 3 May 2016, calling for submissions on this subject).

GST measures

Details of the following three GST related measures were announced as a part the Budget:

  • GST and digital currencies - removing "double taxation"
  • Imposing GST on low value imported goods (value less than A$1,000) from 1 July 2017
  • Reducing GST compliance costs for "small business" with a turnover of less than $10 million

GST and digital currencies - removing "double taxation"

The ATO considers that GST applies to supplies of bitcoins made within Australia by GST registered entities.  Presently GST does not apply to bitcoins or digital currency that are acquired by an Australian resident from a non-resident supplier.  However, this may change from 1 July 2017 after the "Netflix Tax" commences (i.e. the expansion of GST to inbound intangible supplies made to Australian consumers).

Applying GST to bitcoin and other digital currencies potentially results in "double taxation" since arguably both the supply of the relevant good or service and the supply of the bitcoin would be subject to GST. 

The Treasurer previously announced in the "Backing Australian FinTech" statement that the Government proposes to amend the GST to remove this double taxation. 

Immediately following the release of the Budget, a discussion paper was released on Treasury's website outlining potential reform options.  The reform issues and options canvassed include:

  • The most appropriate way to define "digital currency" for GST purposes, recognising that technology is evolving rapidly and constantly.
  • Consideration of whether the definition of "money" should be amended in the GST Act to include digital currency.
  • Alternative options, including treating digital currency supplies (including payments) as either input taxed supplies or GST-free supplies. 

The discussion paper notes that any reform proposal adopted will require the unanimous approval of all States and Territories. Interested parties have until 3 June 2016 to provide their comments to Treasury on the discussion paper.

Imposing GST on low value imported goods (value less than A$1,000) from 1 July 2017

The former Treasurer, Joe Hockey, announced on 21 August 2015 that the States and Territories had unanimously agreed to abolish the existing $1,000 low value threshold for imported goods (which may be imported without GST applying).

The measure has now been included in the Budget for the first time.

The Budget Papers state:

  • the anticipated start date is 1 July 2017
  • the Government will be pursuing a "vendor registration model", meaning overseas suppliers that make supplies of goods connected with Australia exceeding A$75,000 in a 12 month period will need to register for GST in Australia
  • overseas suppliers exceeding the registration threshold will be expected to collect and remit GST on their sales of low value goods to Australian customers

Australia is likely to be the first country to have no low value goods threshold for GST purposes and to adopt a vendor registration model.  Other countries have flagged similar intentions and will likely closely monitor the Australian experience.

It is expected that the Government will release draft legislation for consultation purposes, but this did not occur on Budget night and no timings have been announced.

At this stage, there are many questions yet to be answered, including:

  • How will the GST be calculated?  Will it be based on the retail price for the goods or the taxable import value (which for goods exceeding A$1,000 includes duty, freight and insurance costs)?
  • Will the GST apply to sales to GST registered business (which can generally recover the GST as a credit and hence are revenue neutral), or will it only apply to sales to consumers?
  • At what point in time will the value of the goods need to be determined for the purposes of assessing whether the value exceeds A$1,000? 
  • Will overseas suppliers need to comply with Australian consumer laws which require all prices to be displayed including applicable GST?  It is anticipated those laws will not apply to overseas suppliers, but this will need to be confirmed.

To reduce the impact for their businesses, some overseas suppliers may want to consider restructuring their existing sales arrangements.  For example:

  • Some overseas suppliers who currently sell goods directly via their own website may instead want to begin selling via an online platform operator (for example, Amazon), as such platform operators will likely be required to account for GST on sales made via their platform.
  • Overseas suppliers who presently make multiple shipments of goods to customers (each valued at less than A$1,000) may instead want to make one bulk shipment (valued at more than A$1,000 and subject to the usual taxable importation rules), before distributing individual packages to customers locally in Australia.

The benefits of making such changes to an overseas supplier's existing business operations would need to be weighed against other broader tax, legal and commercial considerations.

Reducing GST compliance for small businesses with turnover less than $10 million

The Government announced that from 1 July 2016 small businesses with annual turnover of less than $10 million will have the option to account for GST on a cash basis and to pay GST instalments as calculated by the ATO.

The same small business will also be able to access simplified BAS reporting requirements, with a view to making classifications of transactions simpler, from 1 July 2017.  A trial of the simplified reporting arrangements will commence on 1 July 2016.

The GST Act does presently allows an entity to account for GST on a cash basis (rather than an accruals basis).  However, it is only available in limited circumstances, which are not as generous as the new $10 million turnover threshold that has been announced.

Superannuation reform initiatives  

The Budget has implemented several measures to "better target superannuation tax concessions". The principal measures applying from 1 July 2017 broadly include:

  • the threshold for the 30% contributions tax will be reduced from $300,000 to $250,000;
  • the annual cap on concessional contributions will be reduced to $25,000;
  • the income threshold for accessing the low income spouse tax offset will be raised from $10,800 to $37,000;
  • a $500,000 lifetime non-concessional contributions cap will be introduced with excess contributions subject to a penalty tax. The cap will consider all non-concessional contributions made on or after 1 July 2007 - this measure applies from the Budget announcement and removes current annual non-concessional contributions caps.