The way forward on previous Governments' tax proposal

It is a welcome relief for taxpayers that the Government has reviewed all of the previous Government’s outstanding proposals for which no legislation has been introduced to Parliament, and given an indication of where it stands in relation to the majority of those measures.

Table 1 summarises those outstanding proposals which the Government has decided should be adopted (either as proposed or with some modification), along with an indicative timetable for their implementation (subject to other Government priorities and the availability of drafting resources).

There are only three measures which the Government has decided will not proceed - affecting GST and real property, GST relief for charities and the Tourist Refund Scheme. These are outlined under the GST heading (page 16).

Approximately 20 individual proposals remain on which the Government has not made a final decision. Included on this list are some international reforms which are now part of the Board of Taxation’s current review of the foreign source income anti-tax-deferral rules and proposals which relate to the review of the income tax self-assessment system (including those subject to public consultation last year on income tax discretions and unlimited amendment periods).

Note that earlier this year, the Tax Design Review Panel, chaired by Mr Neil Wilson of PricewaterhouseCoopers, was charged with examining how to reduce delays in the enactment of tax legislation and improve the quality of tax law changes. The Panel was due to submit its report to Government by 30 April 2008.

Table 2: Measures which will be adopted

Measure announced by former Government	Comments
Taxation of Financial Arrangements (TOFA) stages 3 and 4 (proposed Division 230 tax-timing arrangements)	Will apply to income years commencing on or after 1 July 2009 (with no ability for early adoption). Legislation to be introduced in Spring 2008 sittings of Parliament, which are scheduled to commence on 26 August 2008.
Consolidation measures - including measures announced in 2007-08 Federal Budget, and on 27 October 2006, 1 December 2005, and 4 December 2003	The Federal Government will proceed with the measures, subject to review of application dates and the need for appropriate transitional rules as part of the ongoing consultation process during the development of the legislation where some of the measures may also be reviewed. Legislation to be introduced in Spring 2008 sittings.
Consolidation - scrip for scrip roll-over and corporate restructures	Modification to existing scrip for scrip CGT roll-over provisions will be applicable from 7.30pm (AEST) 13 May 2008 - see main text. Legislation to be introduced in Winter or Spring 2008 sittings.
Taxation of share rights - to restore the long standing taxation treatment of rights issues to overcome the High Court’s decision in Commissioner of Taxation v McNeil	Legislation to be introduced in current Winter 2008 sittings.
Payment of temporary resident’s superannuation to the Australian Federal Government	Consultation paper was released for public comment by 26 May 2008. Legislation to be introduced in current Winter 2008 sittings.
Thin capitalisation and application of accounting standards	Allow departure from current accounting treatment in relation to certain intangible assets, and to exclude deferred tax assets and liabilities, and surpluses and deficits in defined benefit funds. Legislation to be introduced in current Winter 2008 sittings.
GST and international telecommunications mobile phone global roaming	Modified so as to be a more targeted measure. Legislation to be introduced in Spring 2008 sittings.
Prescribed private funds - incorporating name changes, removals and approvals	Each fund has been informed of the decision to proceed.
Foreign currency amendments	Some modifications are to be made to extend the scope of compliance cost saving measures and to ensure operation of the rules as intended. The measures will still be back-dated to 1 July 2003. Legislation to be introduced in Spring 2008 sittings.
Debt-equity rules and Upper Tier 2 financial instruments	Extend until 1 July 2008 the transitional provisions to allow further time for consultation and development of regulations. Regulations expected mid-2008.
Enhancing small business capital gains tax concessions to allow access by a taxpayer owning an asset used in a business by an affiliate or a partnership	Legislation to be introduced in Winter or Spring 2008 sittings.
Regulations for private rulings requiring valuations	Draft regulations were released on Budget night for consultation. Regulations expected to be made in second half of 2008.
Petroleum Resource Rent Tax - minor policy amendments	Amendments to apply from 1 July 2008. Legislation to be introduced in Winter or Spring 2008 sittings.
PAYG instalments paid annually when voluntarily registered for GST	Measure deferred to 1 July 2009. Legislation not expected to be introduced before 2009.
Simplified imputation system - further components (including the franking credit trading rules) and minor modifications	The changes will be subject to consultation during development of the final legislative elements of the system, including a modification to ensure income beneficiaries of testamentary trusts are not prevented from accessing franking credits because of the rules. Legislation not expected to be introduced before 2009.
Company loss recoupment measures relating to continuity of ownership test (announced in 2007-08 Federal Budget)	Subject to consultation. Legislation not expected to be introduced before 2009.
Verification measures to support new arrangements concerning Liquids, Aerosols and Gels (LAGS) and the sealed bag scheme	Subject to consultation. Legislation not expected to be introduced before 2009.
Defer settlement of excise and excise-equivalent customs duties to a monthly cycle, rather than the existing weekly cycle	Legislation not expected to be introduced before 2009.
Enhance and streamline eligibility for refunds, remissions and drawbacks of excise and excise-equivalent customs duty	Legislation not expected to be introduced before 2009.
Provide tax concessions for the International Criminal Court and certain of its officials	Legislation not expected to be introduced before 2009.

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