Explanatory Memorandum
(Circulated by authority of the Minister for Housing and Assistant Treasurer the Hon Michael Sukkar MP)General outline and financial impact
Significant global entities
Schedule 1 to the Bill broadens the definition of significant global entity in the tax law so that it:
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- applies to groups of entities headed by an entity other than a listed company in the same way as it applies to groups headed by a listed company; and
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- applies despite exceptions to when a group of entities must prepare consolidated accounts, including materiality rules, in the applicable accounting rules.
The amendments also modify the rules that identify which entities must undertake country by country reporting under the tax law to ensure these rules are aligned with Australia's international commitments.
Date of effect: The amendments made by Schedule 1 apply in relation to income years or periods commencing on or after 1 July 2019. However, penalties that arise from the measure do not apply until 1 July 2020 for entities that were not previously significant global entities.
Proposal announced: This Schedule fully implements the measure 'Company Tax - significant global entity definition amendment' from the 2018-19 Budget.
Financial impact: This is a revenue protection measure - the revenue impact is estimated to be nil.
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact: Minimal. This measure ensures that the law operates consistent with the OECD model for country by country reporting. The entities to which the amendments apply may have initial transitional compliance costs to determine if relevant integrity and penalty provisions will apply to them. It is not expected that the amendments will result in entities having significant ongoing additional reporting requirements.
Permanent relief for merging superannuation funds
Schedule 2 to the Bill removes impediments to mergers between complying superannuation funds by permitting the roll-over of both revenue gains or losses and capital gains or losses.
Date of effect: The Schedule commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives the Royal Assent, making tax relief for merging superannuation funds permanent from 1 July 2020.
Proposal announced: The Schedule implements the measure 'Permanent tax relief for merging superannuation funds' from the 2019-20 Budget.
Financial impact: This measure is estimated to have an unquantifiable reduction in revenue over the forward estimates period.
Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact: This proposal is expected to result in a low overall compliance cost impact, comprising a low implementation impact and a low decrease in ongoing compliance costs.