Australia: An overview of recent tax developments in Australia

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Australia: An overview of recent tax developments in Australia

Ndreka

Matthew Cridland

One of the major items of recent Australian tax news has been the increasing efforts of the Australian Taxation Office (ATO) to investigate taxpayers named in the Panama Papers. Other developments have included a recent decision by the Administrative Appeal Tribunal (AAT) regarding input tax credit (GST credit) entitlements for GST incurred on retirement village development costs. A tax Bill has also been introduced by the recently re-elected government, led by Prime Minister Malcolm Turnbull, which will implement the new Germany/Australia double tax treaty once enacted. The ATO has also published its 2016-17 corporate tax plan. Meanwhile, the Board of Tax is continuing to focus on companies signing up to the Tax Transparency Code.

Panama Papers

The Serious Financial Crime Taskforce (SCFT) undertook a "week of action" in response to the Panama Papers. More than 100 taxpayers were contacted and informed that they are subject to compliance action.

The week of action included a focus on six accountants and up to 60 of their clients. The ATO indicated that it has built a profile of more than 1,000 Australian taxpayers identified in the Panama Papers, although it noted that simply being named in the Panama Papers is not necessarily an indication that a taxpayer has done anything wrong.

Input tax credits and retirement villages

The AAT has affirmed the objection of the ATO regarding the ability for a taxpayer to claim input tax credits on 91% of the cost of acquisitions for the Stage 1 construction of a retirement village (Re RSPG and FCT [2016] AATA 687).

The issue was whether developers could claim back the GST on development costs, as they do in traditional housing. In retirement village developments, the credits are not available to the same extent because the accommodation units are not sold, as in traditional housing, but are leased or licensed.

Germany/Australia double tax treaty

The International Tax Agreements Amendment Bill was introduced into parliament on September 1 2016. Once enacted, the International Tax Agreements Act 1953 will be amended to give effect to the double tax agreement between Australia and Germany signed in November 2015. The existing 1972 treaty will be replaced by the new treaty.

The new German treaty is the first Australian treaty to include integrity measures arising from the G20/OECD BEPS Project. It includes measures to protect against treaty shopping and the use of conduit vehicles to exploit treaty benefits. The new treaty also includes measures to facilitate the sharing of taxpayer information between German and Australian tax authorities and measures relating to mutual assistance on the recovery of tax debts.

The benefits of the new treaty include reduced Australian withholding tax rates, together with benefits for income received by Australian managed investment trusts and certain German collective investment vehicles.

ATO Corporate Plan 2016-17

The recently released ATO Corporate Plan for 2016-17, which will operate from 2016-17 until 2019-20 has set out the key focus areas of the ATO, which have been described as a desire to "deliver better taxpayer experience". The key aspects of this plan include the tailoring of ATO communications to individual taxpayers, attempting to strengthen the relationship with tax and superannuation professionals and establishing the Tax Avoidance Taskforce in collaboration with the Treasury Department. The taskforce will aim to improve the ATO's ability to address corporate tax avoidance.

Tax transparency code

Medium and large businesses are being encouraged to continue to sign up to the voluntary tax transparency code, which is a minimum standard of public disclosure for tax information.

While there is no prescribed timing for publishing a tax transparency code report yet, once a report has been published a company can notify the ATO of its compliance with the code. The company can also subsequently be listed on the public register of reporting companies which is maintained by the Board of Taxation.

Matthew Cridland (matthew.cridland@dlapiper.com)

DLA Piper Australia

Tel: +61 2 9286 8202

Website: www.dlapiper.com

more across site & shared bottom lb ros

More from across our site

In an exclusive interview with ITR, Ian Gary calls for a central public CbCR database and bemoans the US’s lack of involvement in international tax transparency
Reckitt Benckiser is to divest its Essential Home business, which includes more than 70 brands, to private equity firm Advent International
In the first of a new series of weekly opinion pieces, ITR Editor Tom Baker reflects on the OECD’s attempts to sanitise the US’s brazen pillar two negotiations
The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
Gift this article