The Budget focuses on maintaining the integrity of Australia’s tax system to ensure it is fair and secure to all and covers five key areas.
The Government will continue to crack down on the cash economy with additional funding for the Tax Office’s Black Economy Taskforce extended until 30 June 2018.
The taxable payments reporting system will be expanded to ensure payments made to contractors in the courier and cleaning industries are reported from 1 July 2018.
Anti-avoidance tax behaviours will also be targeted as the Government intends on banning technology that modifies or deletes sales records for the purpose of minimising tax.
Finally, aggressive tax structuring where hybrid instruments are used to exploit the tax differences between countries are on the Government’s radar, and the Multinational Anti-Avoidance Law will be strengthened to ensure corporate structures, i.e. foreign partnerships or foreign trusts, are compliant with the law.
Deductions for travel expenses for a residential investment property will be disallowed. This measure addresses issues with investors that have been claiming travel costs for private purposes or who have not properly apportioned their costs. Additionally, deductions for plant and equipment in residential property investments will be limited to expenses directly incurred by investors.
GST law will be strengthened to prevent some property developers from avoiding GST obligations by ensuring GST is paid directly to the ATO when purchasing newly constructed residential properties or new subdivisions.
From 1 July 2017, small business capital gains tax (CGT) concessions will be amended to ensure that concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.
Tighter capital gains tax rules for foreign and temporary residents will deny access to the main residence exemption when they sell Australian property. Furthermore, the foreign resident capital gains tax withholding regime will see the withholding rate rise to 12.5 per cent, and the threshold reduces from $2 million to $750,000.
The Government intends on bolstering the integrity of the super system by including limited recourse borrowing arrangements (LRBA) in a member’s total superannuation balance and transfer balance cap, effective from 1 July 2017. Also, on the cards is the tightening of related party transactions on non-commercial terms to help increase super savings from 1 April 2018.