Tax Changes Are Coming

• returned 92% of upward revisions to revenue since the May Budget, and 88% of revenue upgrades since coming to office.
• identified a further $9.8 billion in savings and reprioritisations, with a total of $49.6 billion since the election.

TAX CHANGES ANNOUNCED:

• Denying deductions for ATO interest charges: From 1 July 2025, the Government will deny deductions for Australian Taxation Office (ATO) interest charges, specifically the general interest charge (GIC) and shortfall interest charge (SIC).

• Foreign Investment – lower fees for Build to Rent projects:The Government will apply the lower commercial foreign investment application fee to foreign investments in Build to Rent projects where investors are proposing to acquire residential land or agricultural land.

• Foreign Investment – raising fees for established dwellings: The Government’s plan to boost Australia’s housing supply includes the following:
  • Tripling foreign investment fees for foreign investors who apply to purchase established dwellings from the day after the date of Royal Assent of the enabling legislation.
  • Doubling vacancy fees for foreign investors who have purchased residential dwellings (new and established) since 9 May 2017. This will result in a six‑fold increase for vacancy fees for established dwellings affected by the tripling of foreign investment fees, and a doubling for other vacancy fees. This will commence from the day after the date of Royal Assent of the enabling legislation.
  • Providing $3.5 million to enhance the ATO’s compliance regime to ensure foreign investors comply with fee, notification, and other regulatory requirements such as selling their residence when required.

• Increasing the integrity of the foreign resident capital gains withholding (FRCGW) regime: From 1 January 2025, the Government will increase the tax rate from 12.5% to 15% and reduce the withholding threshold from $750,000 to $0.

• Luxury Car Tax – modernising the luxury car tax for fuel‑efficient vehicles:
  The Government will modernise the Luxury Car Tax (LCT) by tightening the definition of a fuel‑efficient vehicle and updating the indexation rate for the LCT value threshold for all‑other luxury vehicles, from 1 July 2025.

• Multinational Tax Integrity Package: Amend the 2022–23 October Budget measure Multinational Tax Integrity Package – denying deductions for payments relating to intangibles held in low‑or no‑tax jurisdictions to better target the measure. The amendments apply to payments made from 1 July 2023.

• Deferral of measures: The Government has also deferred the start date of the following measures:
  • The 2022–23 October Budget measure Multinational Tax Integrity Package – improved tax transparency related to public country by country reporting from 1 July 2023 to 1 July 2024, with further consultation on specific parameters, including the appropriate level of disaggregated reporting.
  • The 2016–17 MYEFO measure Tax integrity – franked distributions funded by capital raisings from 15 September 2022 to the date of Royal Assent.
  • The 2022–23 October Budget measure Improving the integrity of off‑market share buy‑backs as it relates to the taxation of selective reduction of capital from 25 October 2022 to 18 November 2022.