Corporate - Significant developmentsLast reviewed - 09 December 2022
The following temporary economic stimulus measures introduced as part of the Federal Government’s economic response to COVID-19 are due to expire soon:
- Business with aggregated turnover of up to 5 billion Australian dollars (AUD) have the choice to claim an immediate tax deduction for the cost of an eligible depreciating asset first held and installed ready for use by 30 June 2023. See the Deductions section for more information.
- A temporary loss carryback measure can be chosen by companies with an aggregated turnover of less than AUD 5 billion that have tax losses incurred in the 2019/20, 2020/21, 2021/22, and/or 2022/23 income years for offset against taxed profits from the 2018/19 or later income years. See the Deductions section for more information.
Employer-provided zero or low emissions vehicles with a value at first retail sale below the luxury car tax threshold for fuel-efficient vehicles are no longer subject to fringe benefits tax where provided from 1 July 2022. Furthermore, from 1 July 2022, there is no customs duty on electric vehicles, plug-in hybrid vehicles, and hydrogen fuel-cell vehicles with a customs value less than the fuel-efficient luxury car tax threshold. See the Other taxes section for more information.
Under the superannuation guarantee (SG) scheme, which requires employers to contribute a certain percentage of an employee's earnings base, subject to limited exceptions, to a registered superannuation fund or retirement savings account on behalf of the employee, the required SG percentage has increased to 10.5% from 1 July 2022 and will remain so until 30 June 2023, at which time it will increase to 11%. See the Other taxes section for more information.
The state of Victoria has a windfall gains tax that applies to the increase in the value of land in Victoria that results from a rezoning that takes effect on or after 1 July 2023. See the Other taxes section for more information.
Australia has a new free trade agreement with India that enters into force on 29 December 2022, and the agreement with the United Kingdom (UK) is expected to be implemented soon. See the Other taxes section for more information.
The Australian government plans to enter into many new and updated tax treaties in 2023, with a new treaty with Iceland signed on 12 October 2022. See the Withholding taxes section for more information.
A new tax and regulatory framework to support a corporate collective investment vehicle (CCIV) now applies with effect from 1 July 2022. In broad terms, a CCIV is a type of company that is limited by shares and used for funds management and is taxed on a flow-through basis.
With the change of federal government in May 2022, the following tax measures affecting multinationals are yet to be implemented:
- The Organisation for Economic Co-operation and Development's (OECD’s) Two-Pillar Solution to address the tax challenges of digitalisation of the economy.
- Effective for income years commencing on or after 1 July 2023, replace the thin capitalisation safe harbour method applicable to non-financial entities with a new test to limit debt-related deductions to 30% of profits (EBITDA), replace the existing worldwide gearing test with a new earnings-based group-ratio rule, and limit the use of the arm’s-length debt test to external (third party) debt. See the Group taxation section for more information.
- Deny deductions for payments made from 1 July 2023 to related parties that relate to intangibles held in a low or no-tax jurisdiction. See the Group taxation section for more information.
- Greater tax transparency measures. See the Other issues section for more information.