The November Legislative Flurry

Much has been written already about the many Acts passed by the Parliament in the last sitting week of 2024. This Tax Insight catalogues what happened to the unenacted tax legislation. Some Bills were passed unamended, some were hurriedly amended during their passage and then passed, one was split and one was ‘unsplit’, some Bills were left in abeyance perhaps to resurface in 2025, and one Bill was formally withdrawn. We also mention some tax proposals which are still pending but have yet to be introduced into Parliament in the form of a Bill.  The Acts have yet to receive the Royal Assent, but this is expected shortly.

International tax measures

GloBE 15% worldwide minimum tax

Passed: The Parliament passed the three Acts which establish the framework for the 15% worldwide minimum tax (GloBE):
* Taxation (Multinational – Global and Domestic Minimum Tax) Act 2024,
* Taxation (Multinational – Global and Domestic Minimum Tax) Imposition Act 2024,
* Treasury Laws Amendment (Multinational – Global and Domestic Minimum Tax) (Consequential) Act 2024.

Amendments: The (Consequential) Act was amended in the Senate to exclude securitisation vehicles from provisions which will impose joint and several liability on other connected entities for amounts of tax not paid by the principal taxpayer.

Rules for GloBE 15% worldwide minimum tax

Pending: The Rules, which provide the detailed provisions for the working of the tax, have not yet been issued by the Treasurer.  An Exposure Draft of the Rules was released for consultation by Treasury in March 2024.

Increase to the rate of non-resident withholding tax

Passed: Parliament passed the Act which will increase the rate of foreign resident capital gains withholding from 12.5% to 15%: Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024, sch 1.

Remove threshold for non-resident withholding tax

Passed: Parliament passed the Act which will remove the threshold (currently, affected assets with a market value exceeding $750,000) below which foreign resident capital gains withholding does not apply: Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024, sch 1.

Changes to the definition of taxable Australian property

Pending: No Bill was introduced into Parliament in this sitting to give effect to Treasury’s Consultation Paper (released in July 2024) to expand the range of assets within Australia’s CGT net and subject to Australian tax if owned by non-residents. Treasury has not even released an Exposure Draft which is concerning given the importance of the changes for some investors and the proposed 1 July 2025 start date.

Public country by country reporting

Passed: The Parliament passed Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024, sch 4 of which requires certain taxpayers to report various items of tax information to the ATO for the ATO to publish on a government website.

Treaties with Slovenia and Portugal

Pending: No Bill was introduced into Parliament in this sitting to incorporate into Australian domestic law the income tax treaty with Slovenia (signed in September 2024) or the treaty with Portugal (signed in November 2023).  Treasury has since released an Exposure Draft of a Bill to incorporate the treaty with Portugal into domestic law (but not the treaty with Slovenia).

Changes to Part IVA

Pending:  No Bill was introduced into Parliament in this sitting to give effect to the proposed expansion of the Australian general anti-avoidance rules announced in the 2023-24 Budget.  In the 2024-25 Budget, the Government said that these measures would now apply to income years on or after Royal Assent (rather than 1 July 2024) regardless of whether the scheme was entered into before or after that date.    

Corporate tax

Deny deductions for SIC and GIC

Pending: The proposal to deny a deduction for amounts of shortfall interest or general interest charge in relation to assessments for income years starting on or after 1 July 2025 was included in Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024, sch 2.  The Bill was not passed during this sitting.

Corporate subsidiary disclosures in annual reports

Passed: Parliament passed amendments modifying the recently-introduced Corporate Entity Disclosure Statement, required in Annual Reports by the Corporations Act 2001: Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Act 2024.  The amendments address problems under the current language about reporting dual-resident entities, trusts and other tax transparent entities and how to report entities established in countries with no income tax system.

Tax incentives

Build to rent measures

Passed: In summary, the BTR incentives were passed:
* increasing the rate of building allowance from 2.5% to 4% for qualifying developments, and
* reducing the rate of MIT withholding tax from 30% to 15% for fund payments from MITs undertaking qualifying developments.

The process before Parliament involved resurrecting and then enacting the original (June 2024) version of the BTR measures in Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 sch 1 with some amendments, as well as Capital Works (Build to Rent Misuse Tax) Act 2024.

Amendments: The Government moved 18 amendments to the Bill (17 of which relate to BTR measures, the other see 3.4 below) when it was before the Senate. The changes to the BTR regime are summarised in the Appendix to this Tax Insight.

Withdrawn: The BTR measures had been excised in the Senate from the June 2024 version of Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 in July 2024 and put into a new Bill, Treasury Laws Amendment (Build to Rent) Bill 2024.  That Bill was withdrawn upon the resurrection of the June 2024 version of the Bill.

Hydrogen production incentive

Pending: The Government introduced into the House of Representatives the Bill to enact a refundable tax offset of $2 per kilogram for production of eligible hydrogen by eligible companies: Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024, sch 1.  The Bill was approved by the House and referred by the Senate to the Senate Economics Legislation Committee.  Submissions are due by 9 January and the Committee’s report is due by 30 January 2025. The tax offset is not due to start until 1 July 2027.

Critical minerals processing incentive

Pending: The Government introduced into the House of Representatives the Bill to enact a refundable tax offset for 10% of the cost of eligible expenditure incurred in processing 31 listed ‘critical minerals’ in Australia: Future Made in Australia (Production Tax Credits and Other Measures) Bill 2024, sch 2. The Bill was approved by the House and referred by the Senate to the Senate Economics Legislation Committee.  Submissions are due by 9 January and the Committee’s report is due by 30 January 2025. The tax offset is not due to start until 1 July 2027.

Small business instant asset write off

Pending: Provisions to extend the $20,000 instant asset write-off for small business entities to 30 June 2025 were included in the original version of Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024. Those provisions survived the splitting of that Bill by the Senate in July 2024. Surprisingly, when the Bill was resurrected in November 2024 in order to enact the BTR measures, the Government removed the provisions from the Bill.  The Government said the measure, ‘will be reintroduced as a Schedule to another Treasury Laws Amendment Bill for debate at a later time’, but did not explain why it was being delayed.

Superannuation

Objective of superannuation

Passed: The Parliament passed the Superannuation (Objective) Act 2024.  It states that ‘the objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’ and requires an MP who proposes a Bill (or a Minister who proposes a regulation) that relates to superannuation to include a statement of compatibility with this objective.

15% additional tax on earnings on superannuation accounts greater than $3m

Pending: The Government’s proposed 15% extra tax on superannuation earnings attributable to total superannuation balance greater than $3m was proposed in Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, schs 1-3 and Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023. The substantive Treasury Laws Amendment … Bill was split in the Senate to excise schedules 4 to 8 (which deal with non-superannuation matters) and put them into Treasury Laws Amendment (Miscellaneous Measures) Bill 2024. None of the Bills was passed by the Parliament.

Appendix

During the passage of Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 through the Parliament, the Government made 17 amendments to sch 1 (which deals with the build-to-rent tax incentive). Our Tax Insight on the original version of the scheme is available here.  The key amendments are set out below:

• access to the MIT withholding tax concession for BTR developments will now extend to qualifying developments that existed, or were under construction, at the date of the announcement, 9 May 2023.  However, the capital works deduction is still only available for BTR developments where construction commenced after 9 May 2023;
• dwellings must now be offered for lease, or be rented, for a term of at least 5 years (increased from 3 years);
• the Minister can, by legislative instrument, insist on some of the terms under which a property is being leased. This appears to be directed at allowing the Government to prohibit ‘no grounds’ evictions;
• the definition of ‘affordable dwelling’ (which included one precise requirement with regard to the level of rent) is being replaced with a more flexible test: that the requirements of a legislative instrument issued by the Minister are met.  This appears to be directed at allowing easier adjustments to criteria such as the rent being asked and the income of the tenant;
• the penalty tax imposed for non-compliance (‘misuse tax’) is being adjusted to try to address an impediment to sales of BTR projects: under the original Bill, sellers would face ongoing exposure to penalties for actions by the purchaser outside their control occurring during the 15-year compliance period. The amendments reverse this model to allow sellers to secure a ‘clear exit’:

  -      all of the misuse tax will be imposed on the owner at the time the development ceased to be an active BTR development, and not any previous owners.  The Explanatory Memorandum says this change will, ‘[target] the claw back to the entity responsible for the failure to comply’; but

  -      the amount of misuse tax payable by the buyer will be calculated by reference to deductions claimed and MIT distributions made during periods when the BTR development was owned by any previous owners, as well as the current owner;

• the obligation to notify the ATO of a change to the ownership of a BTR development will now apply to the acquiring entity as well as the disposin.