Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024
The Tax Institute welcomes the opportunity to make a submission to the Senate Economics Legislation Committee (Committee) in respect of its inquiry and report on the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 (the Bill) and accompanying explanatory memorandum (EM).
In the development of this submission, we have closely consulted with our National Large Business & International Technical Committee to prepare a considered response that represents the views of the broader membership of The Tax Institute.
Our comments in this submission are limited to Schedule 4 and Schedule 7 to the Bill. Schedule 4 to the Bill amends the Taxation Administration Act 1953 (Cth) to implement the public country-by-country (CbC) reporting measure. Schedule 7 to the Bill amends the Income Tax (Transitional Provisions) Act 1997 (Cth) to extend the $20,000 instant asset write-off by 12 months until 30 June 2025.The Tax Institute generally supports the current version of Schedule 4 to the Bill. However, Schedule 4 to the Bill closely resembles the exposure draft released by the Treasury in February this year, and in our view, requires certain amendments. In this regard, our recommended amendments to the Bill and EM may be summarised as set out below.
We note some of these recommendations can be addressed either through legislative amendment or administrative guidance provided by the ATO. Those recommendations that require administrative guidance from the ATO are shared with you for transparency and in consideration of a holistic approach. As far as we are aware, the ATO has not yet commenced public consultation on its plans for administering these rules, though we look forward to working with the ATO in due course in this regard.
- Concerning Schedule 4 to the Bill, aligning the Australian requirements more closely with global reporting standards, including the Organisation for Economic Co-operation and Development (OECD) CbC regime (CbCRs), is a positive step toward reducing the compliance burden, and this is recognised in the EM. However, discrepancies in disclosure requirements between the Bill and other CbC reporting regimes create challenges for taxpayers. The Bill should allow information from the OECD CbCR or EU CbCR to be used if it overlaps with Australia's proposals, easing the transition for affected entities.
- Clarity is needed on the administrative aspects of this proposed measure, regarding how to submit information to the Commissioner, what constitutes a material error etc., with proactive engagement from the ATO. Prompt and detailed guidance from the Commissioner will facilitate and support taxpayers’ compliance with their reporting obligations.
- The de minimis exclusion is welcome for entities with turnover below $10 million, but concerns arise about excluding entities with Australian-sourced income from related party transactions. Further guidance is needed regarding submitting information to the Commissioner, especially for foreign entities serving as CbC reporting parents.
- The Tax Transparency Code should be reviewed for consistency with the proposed measure.
- Also, as a matter of best practice, the Government should conduct a post-implementation review to address operational issues and technical amendments as they arise in practice. Real-time feedback and potential revisions within a year or two of the new rules coming into effect may be necessary.
- In relation to Schedule 7 to the Bill, the proposed temporary increase in the instant asset write-off threshold for small business entities is an ongoing issue in our tax system and creates uncertainty for taxpayers, their advisers and indeed, the administrator. The recent debate between the Senate and the House regarding amendments to this measure in respect of the 2023-2024 income year brought greater attention to this issue. The Tax Institute is of the view that a permanent increase in the instant asset write-off threshold is needed.
Our detailed response and recommendations to further improve Schedules 4 and 7 to the Bill, and the relevant aspects of the EM, are contained in Appendix A.
The Tax Institute is the leading forum for the tax community in Australia. We are committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all.