On 4 July 2019, the Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2019 was introduced in the Australian House of Representatives.
The purpose of the Treasury Laws Amendment Bill 2019 is to implement three distinct tax related measures that the Government announced in the 2018–19 Budget, namely:
- tightening the thin capitalization rules for multinational entities,
- requiring offshore online hotel booking providers to include hotel room bookings in calculating their business turnover for the purposes of the GST, and
- removing the luxury car tax on re-imported cars sent overseas for refurbishment.
The Bill consists of three following schedules:
Thin capitalization: Schedule 1 of the Bill amends the Income Tax Assessment Act 1997 (ITAA97) to implement proposed changes to Australia’s thin capitalization rule and makes consequential amendments to the Income Tax Assessment Act 1936 (ITAA36). The amendments relating to the valuation of assets, liabilities (including debt capital) and equity capital generally apply from 8 May 2018.
The amendments relating to non-ADI foreign controlled Australian tax consolidated groups and multiple entry consolidated groups apply to income years beginning on or after 1 July 2019.
Online hotel bookings: Schedule 2 of the Bill amends the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) to implement proposed changes to GST for online hotel booking providers. Schedule 2 to this Bill requires offshore suppliers of rights or options to use commercial accommodation in Australia to include these supplies in working out their GST turnover. These amendments apply in relation to supplies where consideration is first received, or before consideration is received an invoice is issued, on or after 1 July 2019.
Removing luxury car tax: Schedule 3 of the Bill amends the A New Tax System (Luxury Car Tax) Act 1999 (the LCT Act) to implement proposed changes to the luxury car tax on re-imported vehicles. The Bills Digest is structured to discuss each of these schedules separately.
Schedule 3 to this Bill removes liability for luxury car tax from cars that are re-imported following service, repair or refurbishment overseas. The amendments apply to importations made on or after 1 January 2019.
