Income tax relief for water reforms

In the 2011-12 Federal Budget, the government announced income tax relief for water supply entities and their members, where state and territory government water reforms give rise to capital gains tax and balancing adjustment events.

The proposed changes will be backdated to 1 July 2009.

More information

For more information refer to Federal Budget Paper No.2 - Part 1.

Administrative treatment

The ATO will accept tax returns as lodged during the period up until enactment of the legislation. Assessments will not be reviewed until the outcome of the proposed amendment is known.

After the new law is enacted, taxpayers will need to review their positions:

If a taxpayer lodges a return in accordance with the existing law, once the legislation is enacted, they should seek an amendment to adjust their return as appropriate. Interest on overpayments will be payable on any amendment results in a refund.
If a taxpayer chooses to anticipate the changes, we will not be undertaking any specific compliance activity at this time. If a taxpayer anticipates the change correctly, they will not need to take any further action once the legislation is enacted.
If a taxpayer does not anticipate the changes correctly, they will need to seek an amendment of their earlier assessment. If a taxpayer acted reasonably in anticipating this change, there will be no tax shortfall penalty and, if they then actively seek to amend their return within a reasonable time, we will remit the general interest charge (GIC) attributable to the amendment to nil. Otherwise the full GIC will run from the date the change becomes law.

Last Modified: Wednesday, 13 July 2011

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