Footnotes

Inquiry into the provisions of the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015

[1]        Journals of the Senate, 2013–15, no. 93 (13 May 2015), p. 2585.

[2]        The Global Infrastructure Hub was an outcome of the November 2014 G20 meeting. The Australian government will contribute $30 million for the Hub until 2018. In his second reading speech, the Assistant Treasurer stated that it 'would be inappropriate for the Australian government to tax assistance provided to the Hub under an arrangement agreed to as part of Australia's G20 presidency'. The Hon Josh Frydenberg MP, Assistant Treasurer, Proof House of Representatives Hansard, 27 May 2015, p. 19.

[3]        Explanatory Memorandum, p. 9 [paragraph 1.3].

[4]        Explanatory Memorandum, pp. 9–10 [paragraphs 1.2–1.9].

[5]        To meet this condition, the account holder must have made the minimum contribution or owned their home in at least four financial years; or reached the account balance cap and the account has been open in at least four financial years. Australian Taxation Office (ATO), 'First home saver account', www.ato.gov.au/Individuals/First-home-saver-account/In-detail/Accessing-your-funds/Accessing-your-funds (accessed 5 June 2015).

[6]        ATO, 'First home saver account'.

[7]        Australian Government, Budget Measures 2014-15: Budget Paper No. 2, May 2014, p. 216.

[8]        The Hon Josh Frydenberg MP, Proof House of Representatives Hansard, 27 May 2015, p. 17.

[9]        Schedule 1, item 2014(1).

[10]      The Hon Josh Frydenberg MP, Proof House of Representatives Hansard, 27 May 2015, p. 17.

[11]      Explanatory Memorandum, p. 3.

[12]      Australian Bankers' Association (ABA), Submission 6, p. 1.

[13]      ABA, Submission 6, p. 2.

[14]      Mr Ewen McNee, Submission 1, p. 1. Interest rates offered on savings products have fallen significantly since the FHSA scheme was introduced. Changes to the Reserve Bank of Australia's official cash rate target over time provide some insight into this. When the legislation that introduced the FHSA scheme received the Royal Assent in June 2008, the official cash rate target was 7.25 per cent. As at 1 June 2015, the cash rate target was 2 per cent.

[15]      See Senate Economics References Committee, Out of reach? The Australian housing affordability challenge, May 2015, pp. 173–74.

[16]      That is, a person who is eligible for the zone, overseas civilian or overseas forces tax offset would only be entitled to claim DICTO for a dependent (including a spouse) who is an invalid or cares for an invalid.

[17]      Explanatory Memorandum, pp. 21, 24–25 [paragraphs 2.1 and 2.21].

[18]      Schedule 4 to the Tax Laws Amendment (2012 Measures No. 1) Act 2012 amended the ITAA 1936 to limit the DSTO to income taxpayers who have a dependent spouse born before 1 July 1952. This measure was intended to result in the gradual phase out of the offset as the population ages. Tax Laws Amendment (2012 Measures No. 1) Bill 2012, Explanatory Memorandum, paragraph 4.22

[19]      Explanatory Memorandum, p. 25.

[20]      The offset is indexed. Explanatory Memorandum, p. 22 [paragraphs 2.4 and 2.7].

[21]      Explanatory Memorandum, p. 22 [paragraph 2.8].

[22]      The Hon Josh Frydenberg MP, Proof House of Representatives Hansard, 27 May 2015, p. 18; Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013, Explanatory Memorandum, paragraph 7.2.

[23]      Australian Government, Budget Measures 2014-15: Budget Paper No. 2, May 2014, pp. 13–14.

[24]      Explanatory Memorandum, p. 4.

[25]      The Hon Josh Frydenberg MP, Proof House of Representatives Hansard, 27 May 2015, p. 18.

[26]      Explanatory Memorandum, p. 27 [paragraph 2.29].

[27]      Mr Wayne McEvoy, Submission 2, p. 1.

[28]      Explanatory Memorandum, p. 35 [paragraph 3.1].

[29]      Explanatory Memorandum, p. 36 [paragraphs 3.6–3.7].

[30]      Explanatory Memorandum, p. 35 [paragraph 3.3].

[31]      Explanatory Memorandum, p. 35 [paragraph 3.4].

[32]      The explanatory memorandum noted that the Commissioner of Taxation has issued a tax determination that expressed the view that a taxpayer is entitled to make the choice, at the time of entering into an eligible OB activity transaction, to treat the activity as if it were ineligible. As the transaction is treated as not being an OB activity, the associated income does not risk the taxpayer failing the 'purity test' in section 121EH of the ITAA 1936 if the activity was financed through non-OB money (the purity test provides that if more than 10 per cent of an OBU's assessable income for an income year is attributed to lending, investing or other use of non-OB money, than the concessional tax rate will not apply to any of the OBU's income in the relevant year). By choosing to treat an activity as ineligible, the taxpayer can also avoid a recoupment of exempted withholding tax. Explanatory Memorandum, pp. 36–37 [paragraphs 3.10–3.13].

[33]      Explanatory Memorandum, p. 39 [paragraph 3.27].

[34]      Explanatory Memorandum, p. 52 [paragraph 3.92].

[35]      Australian Financial Markets Association (AFMA) and the ABA, Submission 4, p. 2.

[36]      AFMA and the ABA, Submission 4, p. 2.

[37]      AFMA and the ABA, Submission 4, p. 3.

[38]      Explanatory Memorandum, p. 47 [paragraph 3.56].

[39]      Schedule 3, item 14 [proposed new subsection 121EE(2) of the ITAA 1936].

[40]      Explanatory Memorandum, p. 78 [paragraph 7.4].

[41]      Explanatory Memorandum, p. 78 [paragraph 7.1]. Information on the first and second elements of the reforms can be found in paragraph 7.7 of the explanatory memorandum.

[42]      The Hon Josh Frydenberg MP, Proof House of Representatives Hansard, 27 May 2015, p. 19.

[43]      The 'widely held' requirement is an integrity measure that requires foreign managed funds to have 25 or more members. This is intended to limit the opportunity for Australian investors to access the benefits of the regime by structuring through an off-shore entity and reducing the likelihood that a small number of people could 'control the investments of a foreign managed fund and hence benefit inappropriately from the IMR'. Explanatory Memorandum, p. 116 [paragraph 7.134].

[44]      Explanatory Memorandum, pp. 79, 80 [paragraphs 7.7 and 7.10].

[45]      Schedule 7, part 1, item 1 [proposed new section 842-205].

[46]      Explanatory Memorandum, pp. 82–83 [paragraphs 7.18–7.19 and 7.22].

[47]      Explanatory Memorandum, p. 80 [paragraph 7.10].

[48]      Explanatory Memorandum, p. 80.

[49]      Explanatory Memorandum, p. 81.

[50]      A financial arrangement is an IMR financial arrangement unless it is or relates to a capital gains tax asset that is taxable Australian real property or an indirect Australian real property interest. Schedule 7, part 1, item 1 [proposed new section 842-225 of the ITAA 1997].

[51]      Explanatory Memorandum, p. 84 [paragraph 7.23].

[52]      Platinum Investment Management, Submission 3, p. 1.

[53]      Proposed new section 842-215 of the ITAA 1997 sets out the IMR concession. Proposed new subsection 842-215(1) would provide concessions relating to IMR financial arrangements, whereas proposed new subsection 842-215(2) would provide further concessions relating to permanent establishments that undertake indirect investment through an independent Australian fund manager.

[54]      Schedule 7, item 1 [proposed new subparagraph 842-215(2)(a)(i) of the ITAA 1997].

[55]      Schedule 7, item 1 [proposed new subparagraph 842-215(2)(a)(ii) of the ITAA 1997].

[56]      'Permanent establishment' in subparagraph 842-215(2)(a)(i) is an asterisked term; that is, it is a term defined in section 995-1 of the ITAA 1997 (which provides that the term has the meaning given by subsection 6(1) of the ITAA 1936).

[57]      Platinum Investment Management, Submission 3, p. 2.

[58]      Paragraph 7.26 of the explanatory memorandum stated that 'gains arising from the disposal of portfolio equity interests in companies and in other entities (such as units in a unit trust), gains arising from the disposal of bonds and foreign exchange gains made under forward contracts qualify for the IMR concession'.

[59]      Platinum Investment Management, Submission 3, p. 2.

[60]      Paragraph 7.50 of the explanatory memorandum seemingly provides some guidance on this provision, however, the notation at the conclusion of the paragraph refers to subsections 842‑260(1) and (9) in the bill (which do not exist).

[61]      Alternative Investment Management Association, Submission 5, p. 1.