BEPS bill passes with small last minute changes
Tax Alert - July 2018
By Emma Marr
The Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 has now passed its third reading and is awaiting Royal Assent. Following the Committee of the Whole House stage, two amendments were reported back.
First, GC 13 has been amended by inserting the underlined words in the following text:
“Despite the time bar, the Commissioner may amend an assessment for a tax year (the assessed year) in order to give effect to this section and to sections GC 6 to GC 12 and GC 14 to GC 19 at any time in the period of 7 tax years after the tax year (the return year) in which a return of income is made for the assessed year if, at any time in the period of 4 tax years after the return year, the Commissioner notifies the taxpayer that a tax audit or investigation has commenced and this subsection applies” (clause 36(6) of the reported back Bill).
There was debate in the House about whether the original wording achieved the intention of the Finance and Expenditure Select Committee. Ultimately it was agreed that the wording could incorrectly imply that all that was necessary to extend the time bar was that the Commissioner let the taxpayer know that the subsection applied within the four year period. The correct application is that the Commissioner also has to have let the taxpayer know that a tax audit or investigation had commenced within the four year period, and the new wording more clearly reflects that intention.
Second, the definition of ‘structured arrangement’ in the new section FH 15, which relates to hybrid mismatches, has been amended to give effect to the intention of the Finance and Expenditure Select Committee.
For our most recent commentary on the BEPS legislation, including the application dates of the legislation, read more here.
July 2018 Tax Alert contents
- New Zealand companies may be Australian resident under ATO ruling
- Stop press – June Tax Bill introduced