Tax integrity changes and other measures

The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 (Cth) (Bill) was introduced to the House of Representatives on 24 July 2019 and proposes to make a raft of legislative changes to improve the integrity of Australia’s tax system.

Amongst other things, the Bill seeks to make changes to the CGT small business concession as it applies to ‘Everett assignments’ of partnership interests, the process of disclosing business tax debts and the availability of deductions for vacant land. These proposed changes are discussed below.

$10,000 cash payment limit – Draft legislation released

The Government has released exposure draft legislation and explanatory materials for the Currency (Restrictions on the Use of Cash) Bill 2019 (Cth) (Bill), relating to the proposed economy-wide $10,000 cash payment limit.

These changes arise out of the Final Report of the Black Economy Taskforce which recommended that the Federal Government introduce a $10,000 cash payment limit for transactions between businesses and individuals.

If passed, the Bill will create new offences that apply if an entity makes or accepts cash payments with a value that equals or exceeds the cash payment limit of $10,000.

The proposed offences will be strict liability offences. This means that the offence of making or accepting a cash payment that equals or is in excess of $10,000 will be committed regardless of whether the entity intended or was reckless about whether the payment or series of payments included cash that equalled or exceeded the case payment limit.

Matching hybrid mismatches

On 24 July 2019, the Australian Taxation Office (ATO) released the new Law Companion Ruling (LCR) 2019/3 which focuses on specific elements of the hybrid mismatch rules contained in Division 832 of the Income Tax Assessment Act 1997 (Cth) (ITAA97).

The hybrid mismatch rules under Division 832 of the ITAA97 are intended to neutralise the effects of hybrid mismatches so that unfair tax advantages do not accrue for multinational groups as compared with domestic groups.

Specifically, LCR 2019/3 provides guidance on the phrases ‘structured arrangement’ and ‘party to the structured arrangement’ giving rise to the hybrid mismatch under section 832-210 of the ITAA97.

The ATO has released a decision impact statement following the recent Administrative Appeals Tribunal (Tribunal) decision in the case of Wainwright v Federal Commissioner of Taxation [2019] AATA 33 (Wainwright).

The Wainwright decision, which was delivered in March 2019, handed the Commissioner both a win and a loss in respect to its ability to assess the taxpayers on superannuation benefits paid out of a self-managed super fund, otherwise than in accordance with the Superannuation Industry (Supervision) Regulations 1994 (SISR).