Find out what's new in legislation or other changes to take into consideration when lodging the tax return.
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 provides for a temporary skills and training boost for small businesses in the form of a bonus deduction. Small businesses (with an aggregated annual turnover of less than $50 million) are able to claim the bonus deduction as an additional 20% deduction, on top of their ordinary deduction, for expenditure incurred for the provision of eligible external training courses to employees by eligible registered training providers in Australia.
It applies to eligible expenditure incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2024. Special rules provide for the income year in which the bonus deduction can be claimed.
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 provides for a temporary technology investment boost for small businesses in the form of a bonus deduction. Small businesses (with an aggregated annual turnover of less than $50 million) are able to claim the bonus deduction as an additional 20% deduction, on top of their ordinary deduction, for eligible expenditure incurred and depreciating assets acquired, for the purposes of their digital operations or digitising their operations. The maximum additional deduction is $20,000 per income year.
It applies to eligible expenditure of up to $100,000 per income year incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023. Special rules also apply if claiming the bonus deduction for eligible expenditure on a depreciating asset.
This measure is not yet law.
The Treasury Laws Amendment (2023 Measures No. 1) Bill 2023External Link amended Income Tax Assessment Act 1997 to add distributions funded by capital raising to the list of distributions that are unfrankable.
A distribution by an entity is funded by capital raising if, broadly:
- the distribution is not consistent with an established practice of the entity of making distributions of that kind on a regular basis.
- there has been an issue of equity interests in the entity or another entity; and
- it is reasonable to conclude in the circumstances that
- the principal effect of the issue of any of the equity interests was to directly or indirectly fund some or all of the distribution; and
- any entity that issued or facilitated the issue of any of the equity interests did so for a purpose (other than an incidental purpose) of funding the distribution or part of the distribution.
The amendments apply to distributions made on or after 15 September 2022.
Further information is available at Franked distributions funded by capital raisings.
This measure is not yet law.
Treasury Laws Amendment (2023 Measures No. 1) Bill 2023External Link aligns the treatment for shareholders that participate in off-market share buy-backs undertaken by listed public companies with that currently applied to on-market share buy-backs. It also amends the income tax law in respect of selective share cancellations for shareholders to ensure alignment of tax treatment across capital management activities for listed public companies.
The result of this change is that no part of the purchase price in respect of an off-market share buy-back undertaken by a listed public company is taken to be a dividend. Furthermore, a distribution by a listed public company that is consideration for the cancellation of a membership interest in itself, as part of a selective reduction of capital, is unfrankable.
A company that undertakes an off-market buy-back or selective share cancellation after the measure takes effect may be required to debit the balance of
its franking account.
The amendment applies to buy-backs undertaken by listed public companies that are first announced to the market after 7:30 pm, by legal time in the Australian Capital Territory, on 25 October 2022, and to selective cancellations undertaken by listed public companies that are first announced to the market on or after 16 February 2023.
Further information is available at Improving the integrity of off-market share buy-backs.
For listed public companies, any amounts entered at item 8 –label J – Franked dividends paid or label K – Unfranked dividends paid may be impacted by this bill when it is enacted.
The Digital games tax offset is a refundable tax offset for eligible expenditure incurred in developing digital games in Australia. The amount of the offset is 30% of a company’s total ‘qualifying Australian development expenditure’ as determined by the Minister for the Arts. To be an eligible recipient a company must be an Australian tax resident or a foreign tax resident with a permanent establishment in Australia. An offset can be claimed by a company when the company holds a completion, porting, or ongoing development certificate from the Minister for the Arts.
The maximum amount of the offset that can be claimed is $20 million in an income year. The maximum amount applies not only to a company but also extends to any other company that is connected with, or is an affiliate of, the company. The head company of a consolidated group claims the offset for the group for the relevant income year.
On 13 September 2021, the Amending Australia's Offshore Banking Unit (OBU) Regime became law. The Government will remove the concessional tax treatment for OBUs in respect of offshore banking activities, effective from the commencement of the OBU's 2023–24 income year. Rules that deem an OBU to have only paid one-third of its foreign income tax on its offshore banking income will also no longer apply, meaning that its foreign income tax offset will be calculated using the ordinary rules.
The interest withholding tax exemption for OBUs will also be removed for interest paid on or after 1 January 2024. For more information, see Changes to Australia's Offshore Banking Regime.
Label H1 – 'Credit for interest on early payments – amount of interest' will be removed from the company tax return from the 2022–23 income year onwards.
Interest on early payments (IEP) has now been automated for eligible early payments made from 1 July 2021. As a result, there is no longer a requirement for clients to complete the label H1 to claim a refund of their IEP.
The Government has increased the amount of the Commonwealth penalty unit from $222 to $275, from 1 January 2023. The increase applies to offences committed after the relevant legislative amendment has come into force on 1 January 2023. The penalty unit increase was announced in the 2022–23 Budget.
The penalty unit amount will continue to be indexed every 3 years in line with the Consumer Price Index (CPI) as per the pre-existing schedule, with the next indexation occurring on 1 July 2023.
In the Company tax return 2023, the following labels have been added; at:
- Item 7 – Reconciliation to taxable income or loss
- label 7J – Small business skills and training boost
- label 7L – Small business technology investment boost.
- Item 13 – Losses information – 9 labels for Loss carry back of tax losses 2022–23 carried back.
In the Company tax return 2023, the following labels have been removed at the Calculation statement:
- label M – R&D recoupment tax
- label H1 – credit on interest for early payments – amount of interest
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