Tax integrity – expanding the general anti-avoidance rule in the income tax law

On 9 May 2023, as part of the 2023–24 BudgetExternal Link, the Australian Government announced it will improve the integrity of the tax system by expanding the scope of the general anti-avoidance rule for income tax.

This measure is not yet law.

The general anti-avoidance rule for income tax will be expanded to include schemes that:

• reduce tax paid in Australia by accessing a lower withholding tax rate on income paid to foreign residents
• achieve an Australian income tax benefit, even where the dominant purpose was to reduce foreign income tax.

This measure will apply to income years commencing on or after 1 July 2024, regardless of whether the scheme was entered into before that date.