ARTICLES / INFORMATION

International tax reform

The New International Tax Arrangements (Participation Exemption and Other Measures) Bill 2004 was introduced into Parliament on 1 April 2004 to give further effect to the Federal Government's international tax reforms.

Capital gains tax concessions

The Bill affects the offshore business operations of Australian companies, and permits such companies to disregard capital gains from the sale of shares in foreign subsidiaries which conduct active business overseas. The concession applies to reduce the capital gain arising from certain capital gains tax events affecting shares in foreign company, to the extent to which the foreign company conducts an active business (i.e. trade as opposed to passive investment).

As with all concessions, certain conditions apply before the reduction in capital gains tax can be claimed. It is proposed that these concessions should have effect from 1 April 2004.

Foreign branch income, non-portfolio dividends and listed countries

It is also proposed to extend existing exemptions for branch profits earned in, and non-portfolio dividends paid from companies located in certain listed countries to all countries. Countries will be classified as either listed or unlisted countries going forward, with the distinction between broad-exemption, limited-exemption and unlisted countries being simplified to either listed or unlisted countries.

These changes take place from 1 July 2004.

Tainted services income

Tainted services income (which can be attributed to Australian shareholders of a controlled foreign company) will no longer include income from services provided by a company to a non-resident associate, or the overseas permanent establishment of an Australian resident. The amendments are intended to improve the international competitiveness of Australian companies.

The amendments apply in relation to statutory accounting periods beginning on or after 1 July 2004.

The information you obtain at this site is not, nor is it intended to be, legal advice.
You should consult a lawyer for individual advice regarding your own situation.

Enslin & Associates

Tax & Business
Lawyers

Level 5

15 Queen Street

Melbourne

Victoria 3000

Australia

Ph: 61 3 9614 0436

Fax: 61 3 9614 0122