Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Financial Services, Minister for Women and Minister Assisting the Prime Minister for the Public Service, the Hon Kelly O'Dwyer MP)Chapter 2 Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill 2018
2.1 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
2.2 Schedule 1 to this Bill amends the ITAA 1997 to improve the integrity and operation of the consolidation regime by implementing the following measures:
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- the deductible liabilities measure, which will remove a double benefit that can arise in respect of certain liabilities held by an entity that joins a consolidated group;
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- the deferred tax liabilities measure, which will simplify the operation of the entry and exit tax cost setting rules by ensuring that deferred tax liabilities are disregarded;
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- the securitised assets measure, which will remove anomalies that arise when an entity joins or leaves a consolidated group where the entity has securitised an asset;
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- the churning measure, which will switch off the entry tax cost setting rules for a joining entity where a capital gain or capital loss made by a foreign resident owner when it ceases to hold membership interests in the joining entity is disregarded in certain circumstances;
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- the TOFA measure, which will clarify the operation of the TOFA provisions when an intra-group asset or liability that is, or is part of, a Division 230 financial arrangement emerges from a consolidated group because a subsidiary member leaves the group; and
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- the value shifting measure, which will remove anomalies that arise when an entity leaves a consolidated group holding an asset that corresponds to a liability owed to it by the old group because the value of the asset taken into account for tax cost setting purposes is not always appropriate.
Human rights implications
2.3 This Bill does not engage any of the applicable rights or freedoms.
Conclusion
2.4 This Bill is compatible with human rights as it does not raise any human rights issues.