Australia’s Senate Economics Legislation Committee has published its report on the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024.

This follows after the Senate referred the provisions of the Treasury Laws Amendment (Tax Incentives and Integrity Bill) 2024 (the bill) to the Senate Economics Legislation Committee (the committee) on 28 November 2024 for inquiry and report by 30 January 2025.

The bill aims to ensure fairness and integrity in Australia’s tax system while fostering a cleaner and more sustainable future.

The key provisions of the report are:

Luxury car tax amendments

Update the definition of a fuel-efficient car by reducing the maximum fuel consumption for a car to be considered fuel-efficient for the luxury car tax (LCT) to 3.5 litres per 100 kilometres from the current 7 litres per 100 kilometres.

Denying deductions for interest charges

• Deny income tax deductions for amounts of general interest charge (GIC) and shortfall interest charge (SIC) incurred by taxpayers.
• GIC and SIC are incurred where tax debts have not been paid on time or a tax liability has been incorrectly self-assessed and resulted in a shortfall of tax paid, respectively. Both are currently tax-deductible for all entities.
• The amendments seek to reinforce the requirements imposed on all taxpayers to correctly self-assess their income tax liability, pay their taxes on time, and assist in lowering the amount of collectable debt owed to the Australian Taxation Office (ATO).

Extending the ATO notification period for retaining funds

The bill amends the Taxation Administration Act 1953 (TAA) to extend from 14 to 30 days the period within which the Commissioner for Taxation must notify a taxpayer of their decision to retain a refund amount arising from a business activity statement (BAS) or another notification under the BAS provisions, for verification of information.