Improving the integrity of stapled structures (second stage), closing on Friday 10 August 2018

On 27 March 2018, the Government announced a package of measures to address risks to the corporate tax base posed by stapled structures and similar arrangements and limit access to concessions currently available to foreign investors for passive income.

The Government has released for public consultation the second stage of exposure draft legislation and explanatory material giving effect to the announced measures. The revised exposure draft reflects feedback from public consultation on the first tranche of draft legislation which was released on 17 May 2018 and also includes draft legislation to prevent foreign investors from accessing concessional MIT tax rates on agricultural land.

In addition, this exposure draft legislation includes changes to the treatment of residential housing held in a MIT announced as part of the affordable housing measures.

This exposure draft legislation includes the following measures:

  • Converted trading income to be subject to MIT withholding at the top corporate tax rate;
  • Amending the thin capitalisation rules to prevent foreign investors ‘double gearing’ their investments;
  • Limiting the foreign pension fund withholding tax exemption for interest and dividends to portfolio investments;
  • Creating a legislative framework for a tax exemption for foreign governments, on their passive income from portfolio investments; and
  • Ensuring investments in agricultural land and residential property (other than affordable housing) are subject to MIT withholding tax rate at the corporate tax rate.

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Removing luxury car tax on re-imported cars refurbished overseas, closing on Wednesday 8 August 2018

The draft legislation will remove liability for luxury car tax from cars re-imported following service, repair or refurbishment overseas. This change was announced as part of the 2018-19 Budget, and will take effect from 1 January 2019.

This change will ensure the same luxury car tax treatment applies, regardless of where a car is refurbished. Resolving this inconsistency in the tax treatment of refurbished cars will align with the trade obligations Australia has to its foreign trading partners.

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