The new 1 July 2020 start date comes after Treasury released a long-awaited consultation paper of proposed amendments to Division 7A last October, which raised concerns from tax experts due to its departure from some recommendations in the Board of Taxation’s report.
The previously proposed start date of 1 July 2019 was seen by many as unrealistic due to the timing of the release of draft legislation and the complexity of the changes, with Thomson Reuters noting that practitioners have been keenly awaiting a government announcement about the outcome of its consultations.
The government has now formally accepted that more time will be required to further consult with the industry on the proposed changes.
“The government received valuable feedback from stakeholders which highlighted that this is a complex area of the tax law and raised implementation issues that warrant further consideration,” the budget paper said.
“Delaying the start date by 12 months will allow additional time to further consult with stakeholders on these issues and to refine the government’s implementation approach, including to ensure appropriate transitional arrangements so taxpayers are not unfairly prejudiced.”
Last month, Assistant Treasurer Stuart Robert reassured tax practitioners that the government would land on a “fair and sensible” approach to the amendments, signalling a different view from Treasury’s proposal.
The Tax Institute’s senior tax counsel, Professor Robert Deutsch said the deferral was a positive step considering the concerns from the profession.
“It is a very good idea to defer it because I don’t think a lot of the measures have been properly thought through and I think there needs to be further opportunity for consultations,” said Professor Deutsch.
CPA Australia head of policy Paul Drum also welcomed the deferral and said the professional body would seek to work with the government on the industry’s concerns.
“We sought this deferral in our pre-budget submission and look forward to further discussions on this issue, including appropriate transitional measures to ensure taxpayers are not unfairly prejudiced,” said Mr Drum.
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.