I saw right away that all of you fudders have sought to distract from the conversation, that is why I created a factual and comprehensive thread containing data only and locked it to stop your silly shit.
I will post a precise summary of results backed up by reputable 3rd party sources at
https://bitcointalk.org/index.php?topic=742456.20Thank You.
Would you provide me with the link where you claimed there was a new Australian law.
You had posted unfactual information which you deleted on your so called factual thread.
So GES AU and GES HK are involved with Uro and you're going to claim that his personal bankruptcy does not affect GES's capacity to meet its commitments of $25 million???
Australia: Australia's Budget 2012-13: Business tax changes
Last Updated: 26 May 2012
Article by Tony Frost
Greenwoods & Freehills
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Recent controversies in federal politics illustrate that we live in less than biblical times. However, to paraphrase that lofty source, what a Government giveth, it may also take away. The central theme of the 2012-13 Budget is the cancellation, limitation or deferral of a range of measures that were beneficial to taxpayers, as part of the political strategy of returning the Budget to surplus.
Some of these changes reflect significant reversals of previous policies and could have significant impacts in particular on the local superannuation industry and on levels of foreign investment into Australian managed funds. These and other changes are outlined in this Tax Brief.
Business tax changes
29% corporate rate cancelled
The Henry Review had proposed that Australia's corporate tax rate be reduced to 25% to match the rates of our international competitors. This recommendation was not acted upon but when the Government announced the Resources Super Profit Tax in May 2010, the money from that tax was to be used to reduce the corporate tax rate to 28% starting in 2012. When that tax was replaced by the less ambitious MRRT, the promised reduction in the corporate tax rate was amended to be a reduction to 29%, with small companies eligible for the 29% rate from 1 July 2012 and other companies from 1 July 2013.
Even that modest proposal has now been abandoned. The Government announced in the Budget that the proposed reduction will not proceed, with the "saving" now being used to fund the loss carry-back proposal for companies.
Loss carry back
The idea for a loss carry back regime was first floated in the Henry Review in 2009 and re-appeared at the Government's Tax Summit in October last year. The Business Tax Working Group was convened to undertake more detailed analysis of how such a proposal might work. The Group's report, released last month, was apparently accepted by the Government which announced last Sunday that it will implement a loss carry back regime.
The design of the measure and the transitional rules are both quite restrictive, intended no doubt to cap the total cost to revenue.
First, the measure will be limited to companies and entities taxed as companies presumably because of the difficulties of giving tax refunds to the people who were beneficiaries in trusts in the tax-paying years. Trusts, therefore, will be limited to carrying losses forward.
Secondly, the amount that can be carried back to a prior year is limited to $1m so that a company cannot recover more than $300,000 of the tax paid in a prior year. Presumably this $1m cap will be applied to both a stand-alone company, and to a consolidated group or MEC group. This is consistent with the Working Group's analysis that a cap "would target the measure to small and medium sized businesses ..."
Thirdly, the proposal is to allow the refund of tax where the company suffers a revenue loss, not a capital loss.
Next, the proposed transition to the system will allow companies to claim loss carry back from the 2012-13 income year. The loss can generate a refund of the tax paid only in the 2011-12 year and subsequent years, not all prior years.
Once the system is fully operational, it seems that companies will only be able to recover the tax paid in two prior years. A limit of this kind is common in other countries with a loss carry back measure.
Finally, companies will have to consider the implications of accessing the loss carry back regime on their franking position. The Government's press release has no detail on this issue but it will be critical for listed entities. The Working Group had proposed that the tax refund would be limited to the lesser of the company's franking account balance and $1m. If that proposal is enacted, companies which have paid dividends in the tax-paying years and debited their franking accounts, could find that the loss carry back regime is not of much value to them. Indeed, the Working Group's report acknowledged that their proposal, "may induce some companies to reduce their dividend pay-out rate to increase the reserve of franking credits to support the carry back of losses."
There is still a lot of detail to be provided and the Government has announced that it will release a further Discussion Paper shortly.
Bad debt deductions
The Budget contains a curious proposal to deny a deduction to a lender who writes off a bad debt owed to it by a related party. The purpose of the announcement seems to be to mirror the treatment that would arise if the debt was owed between members of a consolidated group – that is, writing off the bad debt would have no tax consequences, either for the lender or the borrower.
The announcement does not give any indication of the test that will be applied to decide which entities are "related" for the purposes of this rule.
The announcement also provides that the debtor will not be taxed on the transaction. Presumably the word "taxed" will extend to situations where the debtor loses valuable tax attributes because the commercial debt forgiveness rules would apply.
The measure will apply to bad debts written off after 7 May 2012.
Limited recourse debt
The Government has announced that it will overturn the High Court's decision in BHP Billiton on the definition of "limited recourse debt."
Variations of the definition of "limited recourse debt" are used in a number of provisions to identify debts where the borrower is not fully at risk in respect of the borrowing. The BHP Billiton case concerned the scope of Division 243. This Division includes an amount in the assessable income of a debtor where:
the debt is limited recourse debt;
the debt is used to finance expenditure, or the acquisition of property, giving rise to capital allowance deductions;
the debt is terminated (eg, it is forgiven or it becomes bad) before the debt is repaid in full.
The assessable income reflects the deductions that were effectively financed with the part of the debt that was not repaid.
Broadly, a debt will be a limited recourse debt if the creditor's rights against the debtor in the event of default are wholly or predominantly limited to recourse against certain property or are "capable of being limited" in that way.
Where a creditor's rights are explicitly limited under the terms of the relevant loan to recourse against a particular asset, this is clearly a limited recourse debt. Since at least 1996 the Commissioner has argued that a loan to a special purpose entity which is not expressed to be limited recourse is also limited recourse debt on the basis that "the rights of the creditor are limited to the property, being the only asset of the taxpayer." The Commissioner effectively required the existence of additional assets (or a pledge of equity) in the debtor with a value of more than 50% of the debt before he would accept that a debt was not a limited recourse debt.
In BHP Billiton, the High Court concluded that the definition of limited recourse debt did not extend to such "de facto" limited recourse debts. Unlike true limited recourse debts, there was nothing stopping a creditor of a special purpose entity from demanding full payment and forcing the debtor into insolvency. The High Court also held that the reference to creditor's rights being "capable of being limited" was a reference to a power existing at the time the loan was made to prevent the creditor enforcing its rights in accordance with the apparent terms of the loan agreement.
Clearly, neither the ATO nor the Government considered this a sustainable position. From 8 May 2012, the definition of limited recourse debt will be amended to (presumably) align with the Commissioner's position since 1996, as most recently expressed in BHP-Billiton.
This re-introduces Division 243 as a significant issue for special purpose vehicles and highly leveraged entities holding depreciating assets. Such entities will be required to include significant amounts in their assessable income where they are unable to pay their debts in full. They can also be required to include amounts in assessable income where there is a deemed termination of a limited recourse debt, such as where the debt is re-financed with non-arm's length limited recourse debt, even if they are entirely solvent.
It is not clear whether the new definition will apply to debts that are initially full recourse but become "effectively" limited recourse because the debtor's other assets become worthless. Applying Division 243 to such entities when their debts become bad would involve significant hardship.
Scrip for scrip rollover relief
The Government has announced two changes to the "integrity provisions" in the scrip-for-scrip rollover rules.
While there is little detail on the measure, it seems clear that the first change is a direct response to the decision in AXA Asia Pacific Holdings Ltd. In that case, the taxpayer was able to dispose of 100% of its interests in AXA Health in exchange for a cash amount and converting preference shares in the parent of the acquiring group. Although a gain arose for AXA it was ignored under scrip-for-scrip rollover to the extent it received scrip. Importantly, as AXA's converting preference shares did not carry more than 30% of the voting rights and other shareholder rights – despite representing a significant majority economic interest in the acquiring group – the significant and common stakeholder integrity provisions did not apply. Consequently, the acquiring group was able to recognise tax cost bases at all levels based on the market value of the AXA Health shares. No taxable gain then arose on the later trade sale of the acquiring entity. AXA also converted its shares in the acquiring group to ordinary shares and effectively secured the cash from that trade sale for itself without further tax as the conversion was not a taxable transaction under established CGT principles.
The proposed changes seem to be suggesting a tightening of the cost base integrity rules. It appears likely that an economic substance test rather than tests based on strict shareholder rights, will now apply for the purposes of identifying significant and common stakeholder under the integrity provisions. What is less clear is whether the changes will introduce a like-for-like requirement as currently applies for private non-arm's length transactions, so that, in the case of AXA, scrip-for-scrip rollover would only have applied if ordinary AXA Health shares were exchanged for ordinary (not convertible to ordinary) shares in the acquiring group.
The AXA decision is certainly one which Treasury has reacted to strongly, both in relation to these changes and as part of the rationale for the proposed Part IVA changes announced on 1 March 2012.
The second announcement relates to intra-group financing arising from scrip for scrip transactions. Such intra-group debt can arise due to the requirement for the ultimate parent company of a wholly owned group to issue scrip even where the actual acquirer is a subsidiary entity. That is, the parent issues scrip in itself in consideration for the acquisition of shares by a subsidiary. This creates an amount owing from the subsidiary to its parent which can be either left outstanding, capitalised or refinanced.
The current provisions provide that the parent entity will not make a gain from the repayment of that intra-group debt. The announcement suggests that this gain will no longer be disregarded and that this treatment will be applied to debt for other group entities, not just the parent entity.
There is a brief reference to extending the revised integrity provisions to trusts which is somewhat confusing as the scrip for scrip rules as they apply to trusts do not use the wholly owned group concept. This is possibly a reference to revisions to the significant and common stakeholder tests for trusts.
These measures will apply from 8 May 2012.
Amendment to beneficial interests
This announcement follows from an announcement in last year's Budget and the consultation that ensued.
Under the current law, the relevant definitions relating to common and significant stakeholders look at whether the seller has a right to receive distributions "for its own benefit." Where the seller is a trust, superannuation fund or life insurance company it has been argued that the test simply could not be satisfied – these entities do not receive distributions for their own benefit. Similar issues arise in determining whether entities are connected entities for the purposes of the small business concessions.
This year's Budget announces an extension of these changes to cover absolutely entitled beneficiaries, bankrupt individuals, security providers and companies in liquidation. The changes will apply at the option of taxpayers from the 2008-09 income year and automatically from Royal Assent.
Corporate re-organisations
The Government has announced that roll-over relief for shareholders and unitholders who hold their interests on revenue account or as trading stock will be broadened to apply where there is an exchange of interests in a company or a unit trust for shares in another company. The announcement emanates from a November 2011 Treasury Proposals Paper.
This measure appears to be confined to roll-overs:
under Subdivision 124-G where company A is interposed between company B and all of company B's shareholders; and
under Subdivision 124-H where company A is interposed between unit trust A and all of unit trust A's unitholders.
Currently these roll-overs ensure that the interposition of company A is not a taxing point for shareholders and unitholders who hold their shares or units on capital account.
However, Subdivision 124-H does not currently extend roll-over relief to unitholders who hold their units on revenue account or as trading stock.
Moreover, while Subdivision 124-G does currently extend roll-over relief to such shareholders, it is limited in scope and contains technical defects.
Presumably, this expanded roll-over relief:
will start to apply to Subdivision 124-H; and
will apply in an expanded form to Subdivision 124-G.
No concession would be complete without an integrity measure, so (not unreasonably) it will be a requirement for this expanded roll-over relief that the replacement shares in the interposed company retain the trading stock or revenue asset character of the original share or unit that was exchanged.
These measures will apply from 8 May 2012.
Treatment of Tier 2 capital instruments under the Basel III capital reforms
The Budget announced that from the commencement of the Basel III capital reforms on 1 January 2013, certain capital instruments issued by authorised deposit-taking institutions ("ADIs") will be treated as debt for tax purposes, thus ensuring that funding costs should generally be deductible. The announcement will apply to certain types of Tier 2 regulatory capital instruments issued by ADIs and other "related entities" regulated by the Australian Prudential Regulation Authority ("APRA").
Under the proposed Basel III prudential standards released by APRA (most recently in March 2012) such instruments will have to be written-off by the issuer, or converted into ordinary shares if APRA determines that an ADI would otherwise become "non-viable." Without a law change, the effect of such a nonviability provision may be to cause the instruments to be equity rather than debt, such that funding costs might be frankable rather than deductible. That is, such a provision would cause the instruments to fail the "effectively non-contingent obligation" requirement in the debt test and potentially also lead to one or other of the equity tests being met.
An existing tax regulation already ensures that specified "solvency" and capital adequacy conditions do not prevent certain limited term Tier 2 instruments from being debt for tax purposes. However, this regulation would not have been sufficient to cope with the proposed Basel III non-viability provisions.
One disappointing aspect of the announcement is that no mention was made of the tax impact of any write-off in the event of non-viability. If any economic gain to the issuing ADI was to be treated as assessable income at that point, this potential outcome (albeit remote) might cause APRA to reduce the regulatory capital value of the instrument from the issue date. Given that the current law in this regard is contentious, and in light of the low chance of the Government actually collecting tax, in practice, on any such gain in the event of an ADI's nonviability, it would be preferable for the amendments/regulation giving effect to the Budget announcement to also make it clear that no assessable income will arise to an ADI in the event of a write-off of a Tier 2 regulatory capital instrument due to impending non-viability.
Foreign currency regulations
The Budget contains a very brief and cryptic announcement to the effect that "minor technical amendments" will be made to the foreign currency regulations, so as to ensure that compliance cost savings measures operate appropriately. No further clues as to the nature of the amendments, nor their effective date, were provided. Taxpayers who think they might benefit from any such changes should not hold their breath – some of the changes to the forex tax rules announced by then Assistant Treasurer Mal Brough in 2004 have still not been implemented.
Link:
http://www.mondaq.com/australia/x/178210/Corporate+Tax/Australias+Budget+201213
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