On Jun. 5, AST GVT, AST PRL issued bills re build to rent, BNPL, tax.
AST GVT, PRL introducedTreasury laws amendment (responsible buy now pay later and other measures) bill 2024 (Bill) which is a bill for an act to amend the law re tax, consumer credit, Medicare levy and federal financial relations and for related purposes.
In addition Capital works (build to rent misuse tax) bill 2024 (imposition bill) - a bill for an act to impose tax on certain build to rent developments, and for related purposes.
AST GVT, PRL also issued an explanatory memorandum (EM) on Bill, imposition bill.
Also follows AST PRL Sep. 2023 amendment bill re small business, charity, #184630.
Schedule 1 to Bill, re Build to Rent
Schedule 1 to Bill aims to increase supply of rental housing, i.e. affordable tenancies, by improving incentives for institutional investors to support the construction of new build to rent (BTR) developments; schedule 1 increases capital works deduction rate.
Namely, from 2.5 per cent to 4 per cent per year for eligible new BTR developments.
Reduces final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments for eligible new BTR developments from 30% to 15%.
EM outlines AST GVT's response to consult on exposure draft legislation (#207843).
Stakeholders were broadly supportive of AST GVT's policy objective; the draft legislation reflected Option 3, which required a minimum 10% of dwellings to be made available as affordable dwellings with at least 25% discount to market rent.
The AST GVT agreed to adjust the draft legislation in line with certain suggestions.
Specifically, to ensure final legislation achieved the policy objective of incentivizing foreign investment in BTR, including through the supply of affordable housing.
Schedule 2 to Bill, re Buy Now Pay Later
Schedule 2 to Bill extends application of the National credit code as set out in Schedule 1 to National consumer credit protection act 2009 (credit code) to BNPL contracts and establishes low cost credit contracts (LCCCs) as new category of regulated credit.
LCCCs are continuing or non-continuing credit contracts for providing credit to consumers on a low cost basis; most BNPL contracts will be regulated as LCCCs.
Schedule 2 to Bill amends National consumer credit protection act 2009 (credit act) to establish an optional modified responsible lending obligation (RLO) framework available to LCCCs; schedule 2 to Bill also creates new reg-making powers re LCCCs.
This aims to provide appropriate, proportionate protections to consumers who enter LCCCs, while maintaining benefits of consumer access to such kinds of credit products.
Schedule 4 to Bill, re Multinational Tax
Schedule 4 implements Australia’s public country by country (CBC) reporting regime.
Namely, by amending the Taxation administration act 1953(TAA) to require certain large multinational enterprises (defined as CBC reporting parents) to publish below.
Specifically, to publish selected tax information on a CBC basis for specified jurisdictions, and on either a CBC basis or an aggregated basis for rest of the world.
Data is to be published on an AST GVT website, with publication facilitated by AST Tax.
Aim of amendments is to improve data flows to help the public, including investors, to compare entity tax disclosures, in order to better assess whether an entity’s economic presence in a jurisdiction aligns with the amount of tax they pay in that jurisdiction.
The EM outlines AST GVT's response to consultation on exposure draft legislation (#200964); it explains that the legislative changes were relatively minor, limited to technical drafting changes in order to provide additional clarity on interpretation.
Amends it to extend AUD 20k instant asset write-off by 12 months until Jun. 30, 2025.
This will allow small businesses (with an aggregated annual turnover of less than AUD 10mn) to immediately deduct the full cost of eligible depreciating assets costing less than AUD 20k that are first used or installed ready for use on/before Jun. 30, 2025.
The extension will improve cash flow, reduce compliance costs for small businesses.
Overview of Imposition Bill
Imposition Bill ensures the integrity of the tax concessions set out in schedule 1 of Bill.
AST GVT, PRL said imposition bill achieves this by providing for the levy of a misuse tax in the event that an entity improperly claims one or both of the tax concessions.
Next Steps
Bill, imposition bill, will follow required legislative process; 2nd reading moved Jun. 5.
AST PRL Committee
On the same day, AST PRL said provisions of Bill and imposition bill were referred to Economics Legislation Committee for inquiry and report by Jun. 24, 2024.
Committee agreed to inquire into the bills in a single inquiry, and seek an extension from Senate to report on Aug. 2, 2024; the committee agreed to accept submissions until Jun. 28, 2024, noting its intention to seek an extension of the reporting date.
Aug. 2024 Committee Report
On Aug. 2, 2024, AST GVT issued the Economics Legislation Committee report into Treasury laws amendment (responsible buy now pay later and other measures) bill.
The inquiry considered schedules 2 to 7 of the original bill following its division.
The committee welcomes the measures in this bill which would introduce appropriate regulation of the BNPL industry, establish a world-leading CbC tax reporting regime.
In Jul. 2024, AST PRL issued bill on build to rent, re original bill's division, #218091.
Nov. 2024 AST GVT, AFCA Comments on Bill's Passage
On Nov. 29, 2024, AST GVT said it passed Bill above in AST PRL, which will hold large multinationals to account on tax affairs, protect Australians who use BNPL services.
Commencement is per table in s2; certain provisions commence day after Bill receives Royal Assent; AST PRL page links to amendments agreed to in both AST PRL houses.
On the same day, the AST AFCA welcome passage of this important legislation, regulating BNPL as credit, along with requiring BNPL providers to be licensed.
AST AFCA said BNPL is a popular product that can benefit consumers but said rise in complaints to AFCA re BNPL in recent years had underlined need to review regulation.
The provisions of the act commence per s 2 on various dates, with the first of these dates being Dec. 10, 2024; the other dates are Dec. 11, 2024 and Jan. 1, 2025.
Regulators
AST AFCA; AST GVT; AST PRL
Entity Types
Auditor; Corp; Inv Co; MSB
Reference
RF C2024A00138, 12/13/2024; Info, Bill, PR 11/29/2024; Rp 8/2/2024; Bill, Info 6/5/2024; Citation: Taxation administration act 1953; Income tax (transitional provisions) act 1997; National consumer credit protection act 2009; Treasury laws amendment (responsible buy now pay later and other measures) act 2024;
