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Federal Budget 2013-14 – Business

Business

Increase in ASIC fees

The government has revealed an increase in the cost of registering a business name, with the Australian Securities and Investments Commission (ASIC) increasing fees from $30 for one year and $70 for three years to $32 and $74 respectively. Some of the revenue from the move will be used by the corporate regulator to upgrade its call centre infrastructure to better cope with increasing demand from small business.

Increase in 457 visa application charges and compliance scrutiny

From July 1, 2013, the application fee for 457 visas will almost double from $455 to $900. The four-year 457s are temporary residence visas offered to skilled workers and their dependants who are sponsored by an Australian company. The measure is expected to raise $198 million in revenue over four years. The Fair Work Ombudsman is also set to receive $3.4 million over the next four years in new funding to monitor and enforce employer activity among 457 visa holders.

Increase in funding for Innovation Investment Fund and Fair Work Commission

The Innovation Investment Fund has been allocated fresh cash of $350 million, and the Fair Work Commission will receive $21 million specifically aimed at policing workplace bullying.

Allowing businesses in a net refund position to continue to use the GST instalment system

In the 2011-12 budget, the government announced a measure which would allow businesses in a net refund position to access the GST instalment system. The government has now announced a revision to the previously announced measure so that only those businesses already using the GST instalment system will be allowed to continue to use it if they move into a net refund position.

National Broadband Network

Funding of $12.9 million has been pledged to help small businesses take advantage of opportunities from the National Broadband Network, although the ICT Centre of Excellence will be scrapped.

Increase competitiveness

Dubbed the Enterprise Solutions Program, nearly $30 million has been promised over five years to aid small business become more competitive when bidding for government contracts and tenders. Grants of up to $100,000 for feasibility studies and $1 million for proof of concept will be made available, the government said.

The government is also providing $135 million for 150 four year Future Fellowships to attract and retain the best Australian and international mid career researchers “in areas of national importance”.

No word on loss carry-back measures

No mention seems to have been made to the loss carry-back tax measure, which was announced in last year’s budget, and is yet to be legislated.

Compliance

Trusts targeted

The ATO has been allocated an additional $68 million in the 2013-14 budget to target trust misuse. It will focus on the exploitation of trusts to conceal income, misrepresent transactions and artificially reduce trust income amounts to avoid or reduce tax.

It will also focus on what the government dubs “contrived loan arrangements” and the promoters of tax avoidance and evasion schemes.

The ATO will target known tax scheme designers, promoters, individuals and businesses who participate in such arrangements through its compliance activity. “This measure will tackle the issue of abusive trust schemes in the wider community and encourage active compliance by taxpayers,” the budget papers said.

The crackdown is expected to bring in an additional $311 million in revenue. Assistant Treasurer David Bradbury said in a statement announcing the additional funding that “emerging evidence” showed a significant increase in the level of trust-based non-compliance.

Bradbury also indicated there will be further reform of the tax law surrounding trusts and said the government will use intelligence gathered by the ATO to guide the next phase of its consultation on trust taxation law reform.

Tightening measures

Business taxation changes introduced in the 2013-14 budget include a tightening of measures that aim to prevent multinational businesses shifting tax-deductible loans to Australian subsidiaries. The government said it will “address aggressive tax structures that seek to shift profits by artificially loading debt into Australia”.

Other “loopholes and abuses” include tightening the thin capitalisation rules and removing the interest expense deduction for deriving certain foreign exempt income. This and related measures will apply from July 1, 2014.

Dividends

Investors with franking credit tax offset entitlements of more than $5,000 will be prevented from engaging in “dividend washing”, thus claiming two sets of franking credits on effectively the same parcel of shares.

The measure will ensure that when an investor sells shares ex-dividend and then immediately buys equivalent shares that still carry the right to a dividend (known as cum-dividend shares), they will only be permitted to claim one set of franking credits. The changes will be targeted to the special two-day period after a shares goes ex-dividend. This will apply from July 1, 2013.

Data matching and third party information

The government will provide $77.8 million over four years to the ATO to improve compliance by expanding data matching with third party information.

Treasury said the information provided will also improve the pre-filling of tax returns. The measure will establish new and strengthen existing reporting systems for:

  • taxable government grants and specified other government payments
  • sales of real property, shares (including options and warrants), and units in managed funds
  • sales through merchant debit and credit services
  • managed investment trust and partnership distributions, company dividend and interest payments, and
  • transactions reported to the ATO by the Australian Transaction Reports and Analysis Centre.

Capital gains tax (CGT)

The principal asset test for foreign resident CGT will be amended and a non-final withholding tax will be introduced. This will ensure that indirect Australian real interests are taxable if disposed of by a foreign resident.

Where a foreign resident disposes of certain taxable Australian property, the purchaser will be required to withhold and remit to the ATO 10% of the proceeds of the sale as a non-final withholding tax. This will not apply to residential property transactions under $2.5 million or disposals by Australian residents. This measure applies from July 1, 2016.

Also, native title rights transfers will not involve any CGT implications where the transferee is an Indigenous person or holding entity. This last measure retrospectively applies from July 1, 2008.

 

 

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