Thursday, 25 November 2021
That this bill be now read a second time.
Schedules 1 to 4 to the bill will establish an important regulatory framework for the Corporate Collective Investment Vehicle (CCIV) regime, commencing on 1 July 2022.
A CCIV will be a new type of corporate structure for funds management, featuring an umbrella company with all its assets and liabilities segregated into 'sub-funds'. It is designed to be an alternative to the commonly used trust based managed investment scheme.
Schedule 5 to the bill will establish the tax framework for the Corporate Collective Investment Vehicle regime.
The general objective for the CCIV is that the tax outcomes for an investor in a sub-fund of a CCIV align with the existing tax treatment for an investor in an attribution managed investment trust.
Together, these changes aim to enhance the international competitiveness of the Australian managed funds industry and attract greater levels of foreign investment into Australia's financial markets.
Schedule 6 to the bill extends by 12 months the temporary loss carry-back measure introduced by the government in the 2020-21 budget, allowing eligible companies to claim a loss carry-back tax offset in the 2022-23 income year.
The government implemented temporary loss carry-back in 2020 to promote economic activity by providing enhanced cash-flow support to previously profitable companies that fell into a tax loss position as a result of COVID-19.
The law currently allows eligible companies to carry back tax losses from the 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in the 2018-19 income year or later income years. Passage of these amendments will allow eligible companies to carry back tax losses from the 2022-23 income year. Tax refunds are limited to earlier taxed profits and the carry-back of losses cannot generate a franking account deficit.
Companies with aggregated annual turnover of less than $5 billion are eligible for temporary loss carry-back on election when they lodge their 2020-21 and 2021-22 income tax returns and, with the passage of this bill, their 2022-23 income tax return.
Companies that do not elect to carry back losses under this temporary measure can still carry losses forward as normal.
Extending temporary loss carry back is estimated to deliver $2.8 billion in tax relief to companies over the forward estimates.
Schedule 7 to the bill amends the Income Tax Assessment Act 1997 to include the Greek Orthodox Community of New South Wales Ltd, Australian Associated Press Ltd, Virtual War Memorial Ltd, and SU Australia Ministries Ltd on the list of deductible gift recipients. This schedule also extends the specific listings of Cambridge Australia Scholarships Ltd and Foundation 1901 Ltd.
Deductible gift recipient status allows members of the public to receive income tax deductions of $2 or more for donations that they make to these six organisations.
Schedule 7 to the bill also amends the Income Tax Assessment Act 1997 to remove The East African Fund Ltd from the list of deductible gift recipients, as requested by the entity.
Schedule 8 to the bill makes a number of amendments to Treasury portfolio legislation to ensure that Treasury laws operate as intended. The amendments variously clarify the law to ensure it operates in accordance with the policy intention, make minor policy changes to improve administrative outcomes or to remedy unintended consequences, and to correct technical or drafting defects.
The amendments made by schedule 8 to the bill further the government's commitment to the care and maintenance of the Treasury laws and will make it easier, ultimately, for Australians to comply with current laws.
Schedule 9 to the bill requires superannuation fund trustees to have a strategy to assist their members who are retired or approaching retirement.
In the 2018-19 budget, the government committed to introduce a Retirement Income Covenant to codify the longstanding expectations that trustees consider the retirement needs of their members. By requiring trustees to increase their focus on the retirement phase of superannuation, member outcomes will be improved while enabling choice and, ultimately, competition.
This schedule amends the Superannuation Industry (Supervision) Act 1993 to require trustees of a superannuation fund to develop a retirement income strategy for their members. Trustees are expected to have a strategy formulated in writing, and a summary publicly available, from 1 July 2022. Trustees are not required to give effect to all the components of their strategies on 1 July 2022; implementation of the strategy is an ongoing process that is just required from that date.
The strategy will be a high-level governance document and will sit within the existing regulatory framework trustees should already know well. The retirement covenant is one step, therefore, in the government's reforms to better develop the retirement phase of superannuation. The covenant builds on existing reform and will kick-start improvements into the future.
Schedule 10 to the bill amends the Income Tax Assessment Act 1997, importantly, to remove the cessation of employment taxing point for the tax deferred employee share schemes (ESS) that are available to all companies.
These amendments will help Australian companies attract and retain talent.
The changes will apply to new and existing ESS interests that have not yet reached a taxing point, for employees that cease employment from the first income year after the date of royal assent.
Full details of these measures are contained in the explanatory memorandum.