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 today 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.
The consultation period closes on 10 August 2018.
The Government invites interested parties to make a submission.
- Community Housing Industry Association - PDF 282KB
- DomaCom - PDF 94KB
- Financial Services Council - PDF 461KB
- Infrastructure Partnerships Australia - PDF 100KB
- King & Wood Mallesons - PDF 506KB
- KPMG - PDF 101KB
- Lendlease - PDF 284KB
- National Affordable Housing Providers - PDF 357KB
- NZSuperfund - PDF 351KB
- Perpetual Corporate Trust - PDF 220KB
- PowerHousing Australia - PDF 624KB
- PricewaterhouseCoopers - PDF 442KB
- Squire Patton Boggs - PDF 983KB
- Tax Justice Network Australia - PDF 159KB