New Tax-Related Measures Announced by the Government

From Government

• Redesigned Stage 3 Tax Cuts

According to the government, it will make changes to the Stage 3 Tax Cuts and will commence on 1 July 2024. While the government still needs support to make changes to pass through Parliament, the purpose of redesigned Stage 1 Tax Cuts is to benefit lower-income households. The redesigned Stage 3 Tax Cut will allow all resident taxpayers with taxable income under $146,486 to receive a larger tax cut compared with the existing Stage 3 plan.

Tax rate	2023-24	2024-25 legislated	2024-25 proposed
0%	$0 – $18,200	$0 – $18,200	$0 – $18,200
16%			$18,201 – $45,000
19%	$18,201 – $45,000	$18,201 – $45,000
30%		$45,001 – $200,000	$45,001 – $135,000
32.5%	$45,001 – $120,000
37%	$120,001 – $180,000		$135,001 – $190,000
45%	>$180,000	>$200,000	>$190,000

• Mid-Year Economic and Fiscal Outlook Ups the Tax Take

To offer further incentives for tax debts to be paid on time, the Government is proposing to reject deductions for general interest charges and shortfall interest charges imposed by the ATO. This measure will apply to interest expenses incurred in income years starting on or after 1 July 2025. Other measures declared in the Mid-Year Economic and Fiscal Outlook include:

• • An increase to the foreign resident capital gains withholding tax rate to 15% from 12.5% and a reduction of the withholding threshold from $750,000 to nil. The changes will apply to property disposals for contracts entered into from 1 January 2025.

  • An increase in the foreign investment fees that apply to foreign investors who apply to buy already built dwellings.

  • An increase in the vacancy fees for foreign investors who have bought residential properties since 9 May 2017.

  • Reduction of the maximum fuel consumption to 3.5 litres per 100 km from 7 litres per 100km from 1 July 2025.

• Adviser Misconduct: Increasing Regulators’ Power

Some additional exposure draft legislation and papers have been released by the treasury for consultation as part of the government’s reaction to recent matters involving tax adviser misconduct.

• • Tax Agent Services Determination 2023

Exposure draft materials have been released by the treasury in concern with the Tax Agent Services Determination 2023. The draft instrument imposes additional obligations with measures targeting the following areas:

• • • Supporting and promoting the tax profession’s ethical standards, which include requirements on practitioners to take the right steps to support other registered tax agents and BAS agents accountable for compliance with the Code of Professional Conduct.

    • Requirements to not make misleading statements to the ATO or Tax Practitioners Board, or other government agencies where such statements are made in the capacity as a registered tax or BAS agent.

    • Obligations to take reasonable steps to address and avoid material conflicts of interest associated with dealings with Australian government agencies, including a need for reporting such conflicts of interest if they occur.

    • Maintaining privacy in dealings with the government.

    • Maintaining proper records related to tax agent services offered to current and former clients with such records to be kept for five years.

    • Ensuring tax agent services offered on a practitioner’s behalf are performed under appropriate supervision.

    • Needs for tax practitioners to have the right internal control procedures to ensure they are compliant with the Code of Professional Conduct.

    • Imposing obligations on tax practitioners to inform clients on matters that are reasonably relevant and material to their decision to involve or continue to involve the practitioner, including additional obligations to provide data to clients on the Tax Practitioner Board’s public register and complaints process.

  • Improving the Tax Practitioners Board’s Sanctions Regime

A consultation paper has been released by the treasury on new changes for offering the Tax Practitioners Board a stronger sanction regime. The consultation paper reviews the following proposals:

• • • Criminal penalties for practitioners who work without getting registered with the Tax Practitioners Board.

    • Increased civil penalties in the Tax Agent Services Act 2009.

    • An infringement notice scheme attached to the civil penalty regime.

    • A new power to let the Tax Practitioners Board enter enforceable voluntary undertaking with Tax Practitioners.

    • A new power to let the Tax Practitioners Board impose conditional suspensions.

• Tax Treaty with Portugal

On 30 November 2023, Australia signed a new tax treaty with Portugal, which is the first tax treaty between Australia and Portugal. The tax treaty will come into effect after both nations have ratified the treaty and instruments of ratification have been exchanged.