Senate

Treasury Laws Amendment (Tax Integrity and Other Measures No. 2) Bill 2018

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)
This memorandum takes account of amendments made by the House of Representatives to the bill as introduced.

Chapter 7 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

OECD hybrid mismatch rules

7.1 Schedule 1 and Schedule 2 to this Bill are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.2 Part 1 of Schedule 1 to this Bill amends the ITAA 1997 to implement part of the OECD hybrid mismatch rules by preventing entities that are liable to income tax in Australia from being able to avoid income taxation, or obtain a double non taxation benefit, by exploiting differences between the tax treatment of entities and instruments across different countries.

7.3 Part 2 of Schedule 1 to this Bill amends the ITAA 1936 to implement part of the OECD hybrid mismatch rules limiting the scope of the exemption for foreign branch income and preventing a deduction from arising for payments made by an Australian branch of a foreign bank to its head office in some circumstances.

7.4 Schedule 2 to this Bill amends the ITAA 1997 to implement part of the OECD hybrid mismatch rules by:

·
denying imputation benefits on franked distributions made by an Australian corporate tax entity if all or part of the distribution gives rise to a foreign income tax deduction; and
·
preventing certain foreign equity distributions received, directly or indirectly, by an Australian corporate tax entity from being non-assessable non-exempt income if all or part of the distribution gives rise to a foreign income tax deduction.

Human rights implications

7.5 Schedule 1 and Schedule 2 to this Bill do not engage any of the applicable rights or freedoms.

Conclusion

7.6 Schedule 1 and Schedule 2 to this Bill are compatible with human rights as it does not raise any human rights issues.

Strengthening integrity of the film producer offset

7.7 Schedule 3 to this Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.8 Schedule 3 to this Bill imposes an Australian residency requirement for eligibility for the producer offset on individuals that perform services outside Australia through a company or permanent establishment if a film reasonably requires a foreign location to be used for principal photography. This ensures that the producer offset is used to support the Australian screen industry as intended.

Human rights implications

7.9 Schedule 3 to this Bill does not engage any of the applicable rights or freedoms.

Conclusion

7.10 Schedule 3 to this Bill is compatible with human rights as it does not raise any human rights issues.

Income tax and withholding exemptions for the ICC World Twenty20

7.11 Schedule 4 to this Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.12 Schedule 4 to this Bill amends the ITAA 1997 to provide an income tax exemption for the IBC and also an exemption from interest, dividend and royalty withholding tax liability for amounts paid to the IBC.

Human rights implications

7.13 Schedule 4 to this Bill does not engage any of the applicable rights or freedoms.

Conclusion

7.14 Schedule 4 to this Bill is compatible with human rights as it does not raise any human rights issues.

Deductible Gift Recipients

7.15 Schedule 5 to this Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.16 Schedule 5 to this Bill amends the ITAA 1997 to update the list of specifically listed DGRs to include Melbourne Korean War Memorial Committee Incorporated.

Human rights implications

7.17 Schedule 5 to this Bill does not engage any of the applicable rights or freedoms.

Conclusion

7.18 Schedule 5 to this Bill is compatible with human rights as it does not raise any human rights issues.


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