Fringe benefits tax (FBT) car parking threshold
In Taxation Determination TD 2008/12, which was issued on 7 May 2008, the Commissioner advises that the car parking threshold for the FBT-year commencing on 1 April 2008 is $7.07. This replaces the amount of $6.78 that applied in the previous year commencing 1 April 2007.
FBT deferral of lodgement and final payment date
Due to delays with the processing of FBT returns, the Commissioner has granted a general deferral for the lodgement of the 2008 year FBT returns and final payments until 25 June 2008.
Amendments to competition law to assist small business
On 28 April 2008, the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs and the Minister for Small Business, Independent Contract and the Service Economy, announced a package of measures aimed at promoting competition and ‘cracking down’ on anti-competitive behaviour by powerful businesses. According to the Ministers’ announcement, the reform package is aimed at ensuring genuine competition for the benefit of consumers and small businesses.
In the announcement, the Ministers stated that the Government’s amendments will:
- ensure that victims of predatory pricing will not need to prove that the predator has the ability to recoup losses after participating in an anti-competitive ‘below cost’ pricing strategy
- clarify the meaning of the term ‘take advantage’ in section 46 of the Trade Practices Act in response to concerns raised by businesses and the Australian Competition and Consumer Commission (ACCC) that the present meaning of that term has prevented section 46 from capturing anti-competitive behaviour, and
- remove the unnecessary uncertainty that has arisen following the ‘two-track’ process for predatory pricing that developed under the previous Government. The ACCC has said that the dual track process has “caused considerable confusion”, because they focus on the “fundamentally different concepts” of market power and market share.
The reforms will also strengthen the role of the ACCC by enabling it to fully investigate suspected breaches of the law by enhancing its information gathering powers and extending the reach of the ACCC by removing the arbitrary monetary threshold currently applicable to allegations of unconscionable conduct.
According to the Ministers, these reforms will enhance the protection of small business from transactions involving such things as undue influence. The amendments will deal with predatory pricing while allowing businesses to engage in genuine competition and discounting to the benefit of consumers.
Changes to energy use reporting
On 26 April 2008, the Minister for Resources, Energy and Tourism, and the Minister for Climate Change and Water made a joint statement announcing that company reporting on energy use is to be made easier by amendments to Regulations governing the Government’s Energy Efficiency Opportunities (EEO) program. These changes, which are proposed to apply from 1 July 2008, will enable participating companies to streamline energy use reporting with requirements under the new National Greenhouse and Energy Reporting System (NGERS).
The EEO program which is a key component of the Government’s push to improve energy use by Australia’s largest energy-using businesses requires companies using more than 0.5 petajoules of energy a year to undertake energy-efficiency opportunity assessments, and report publicly on the results of those assessments and measures planned to reduce energy use.
The NGERS will collect energy use data which will form the basis for a future emissions trading scheme.
The Ministers stated that streamlining the EEO with the NGERS is designed to address concerns expressed by some businesses that energy use reporting would be duplicated under the two systems. According to the announcement, transitional provisions will allow companies already operating under the existing rules to avoid having to re-do any assessment or reporting work they have committed to.
Withholding tax regime for managed investment trusts
On 30 April 2008, the Australian Taxation Office (ATO) issued a Fact Sheet dealing with a number of administrative issues concerning the managed investment trust (MIT) withholding tax regime which applies to the first income year starting on or after 1 July 2007. Under the rules a distribution to a foreign resident by an MIT comprising Australian-sourced income (other than interest, dividends and royalties which have a final withholding tax regime) and certain capital gains may be subject to a single non-final withholding at the corporate tax rate (currently 30%). This includes distributions made to the foreign resident indirectly through one or more intermediaries, if relevant notices have been provided by the payer.
The purpose of the ATO Fact Sheet is to provide guidance to fund managers and custodians on a number of administrative issues raised by industry in relation to these new withholding tax arrangements.
As noted in the Federal Budget edition of TaxTalk issued on 14 May 2008, the Government has announced changes to the withholding tax regime applying to MITs (discussed above) to establish a final withholding tax regime for distributions other than interest, dividends and royalties (which as indicated above are already subject to a final withholding tax regime). These changes are proposed to have effect for fund payments made in relation to the first income year after the date of Royal Assent of the enabling legislation. With the release of draft legislation on 14 May 2008 and a two-day consultation process, it may well be that the Government is endeavouring to have the new regime in place by 30 June 2008.
The tax rate to be applied under this new regime to the distributions made by MITs will depend on the location of the investor. If the investor is in a country which does not have an approved ‘exchange of information’ treaty with Australia, the withholding rate proposed is 30%. In the case of other investors, the withholding rate is proposed to reduce from 22.5% in the first year, to 15% in the second year and to 7.5% thereafter. In the first year, the tax may be reduced from 22.5% of the distribution where the investor has allowable deductions attributable to the investment which are claimed.
For further information please contact your usual PricewaterhouseCoopers adviser, or:
Greg Lazarus, Partner
Corporate Tax
Phone: +61 2 8266 7334
greg.lazarus@au.pwc.com
Marco Feltrin, Partner
Corporate Tax
Phone: +61 3 8603 6796
marco.feltrin@au.pwc.com
Excise hike for ‘alco-pops’
On 26 April 2008, the Government announced that the excise equivalent component of the customs duty applying to certain imported spirit-based pre-mixed drinks (having an alcoholic strength by volume exceeding 1.15% but not exceeding 10%) would increase from $39.36 per litre of alcohol to $66.67 per litre of alcohol. These drinks are commonly known as ‘alcopops’ or ‘RTDs’ (‘ready to drink’). The increased rates of duty took effect on and from 27 April 2008. Equivalent changes were also made to the rate of excise payable on similar locally manufactured goods.
Consultation on establishing Industry Innovation Councils
On 8 May 2008, the Minister for Innovation, Industry, Science and Research announced consultations with stakeholders as a first step in establishing Industry Innovation Councils.
The Minister said that:
“The Councils will be established in the second half of this year, drawing members from leaders in innovation, business, unions and professional organisations, science and research agencies and government. The Councils will act as key advisory bodies to Government and as innovation advocates. They will play a central role in assisting Government to:
- improve productivity, global competitiveness and market access for Australian industry
- build a high-skilled, flexible workforce
- ensure sustainable development throughout Australian industry, and
- respond to challenges including social inclusion and climate change.
I want the Councils to help bridge the divide between business and research, to assist Australian industry transform itself and to collaborate with other players in the innovation system. I strongly encourage innovation leaders to contribute to these consultations.”
Further information
If you have any queries about issues raised in this edition or would like to be placed on the mailing list for TaxTalk, please contact one of the following:
Adelaide
Scott Bryant, Partner
Phone: +61 (8) 8218 7450
Fax: +61 (8) 8218 7812
scott.a.bryant@au.pwc.com
Brisbane
Tom Seymour, Partner
Phone: + 61 7 3257 8623
Fax: + 61 7 3031 9312
tom.seymour@au.pwc.com
Melbourne
David Wills, Partner
Phone: +61 (3) 8603 3183
Fax: +61 (3) 8613 2880
david.a.wills@au.pwc.com
Perth
Frank Cooper, Partner
Phone: +61 8 9238 3332
Fax: +61 8 9488 8771
frank.cooper@au.pwc.com
Sydney
Ian Farmer, Partner
Phone: +61 (2) 8266 2802
Fax: +61 (2) 8286 2802
ian.farmer@au.pwc.com
