On 17 May 2018, Treasury released the first stage of exposure draft legislation and explanatory material giving effect to the measures announced on 27 March 2018 to address risks to the corporate tax base posed by stapled structures and similar arrangements. These measures propose to limit access to concessions currently available to foreign investors for passive income.

This exposure draft legislation proposes to amend the Income Tax Assessment Act 1997, Income Tax Assessment Act 1936 and Tax Administration Act 1952 to improve the integrity of the income tax law by:

  • increasing the managed investment trust (MIT) withholding rate on income attributable to trading business;
  • modifying the thin capitalisation rules to prevent double gearing structures;
  • limiting the withholding tax exemption for superannuation funds for foreign residents to limit access to tax concessions for foreign investors; and
  • codifying and limiting the scope of the sovereign immunity tax exemption.

Please refer to our detailed coverage of the measures (as proposed) in the April 2018 issue.