On 12 February 2020, the Treasury Laws Amendment (2020 Measures No. 1) Bill 2020 was submitted in the Australian House of Representatives. This bill contains two measures that maintain the integrity and efficiency of Australia’s tax system.
Schedule 1 to the bill amends the Income Tax Assessment Act 1997 to extend the definition of a Significant Global Entity (SGE) to include members of large business groups headed by proprietary companies, trusts, partnerships, investment entities and individuals.
SGE is a concept to define a group of entities under the control of a large multinational. Such groups are a key focus for tax authorities to prevent profit shifting. Extending the definition therefore will ensure that multinationals cannot structure to avoid multinational tax integrity rules.
Schedule 2 to the bill makes permanent the current temporary capital gains tax relief for merging superannuation funds, which is otherwise due to expire on 1 July this year. The current arrangements remove unnecessary impediments that would otherwise apply to mergers by allowing super funds to transfer revenue and capital losses to a new merged fund and to defer taxation consequences on gains and losses from revenue and capital assets.
As drafted, the amendments will apply in relation to income years or periods commencing on or after 1 July 2019. However, penalties that arise from the measure do not apply until 1 July 2020 for entities that were not previously significant global entities.
