Modernising Digital Assets and Payments Regulations from 2024-25

$7.5 million over four years, beginning in 2024-25 (and continuing at $1.5 million per year), has been allocated to update financial regulatory frameworks in order to increase competition and consumer safeguards for services enabled by new technology.

The government will:

• design and comment on legislation to licence and regulate platforms that store digital assets and advance associated reforms, including continuing exploratory work on Central Bank Digital Currencies, asset tokenization, and decentralised finance.
• Introduce a new regulatory framework for payment service providers (including digital wallets and electronic stored value providers), which includes licencing and a mandatory ePayments Code. 

Extending transitional reporting for nonprofits

The present charity transitional reporting arrangement will be extended by five years.

The Australian Charities and Not-for-profits Commission (Consequential and Transitional) Regulation 2016 will be amended by the government to extend the present charity transitional reporting structure for five years.

The regulation’s purpose is to reduce the regulatory reporting burden on certain not-for-profit entities (registered entities) under the Australian Charities and Not-for-profits Commission Act 2012 (the ACNC Act) by allowing the ACNC Commissioner to treat a statement, report, or other document provided by a registered entity to an Australian Government agency under an Australian law as satisfying certain reporting obligations under the Act. 

ATO counter-fraud Strategy

The government stated that it would allocate $187 million to the ATO over four years beginning July 1, 2024, to increase its capacity to identify, prevent, and remediate fraud in the tax and superannuation systems.

Funding includes:

• $78.7 million for enhancements to information and communications technology that will allow the ATO to detect and prevent suspicious conduct in real time.
• $83.5 million for a new compliance taskforce to recoup lost income and intervene when fraudulent refund requests are submitted.
• $24.8 million to strengthen the ATO’s administration and oversight of its anti-fraud initiatives, particularly how it supports people who have been damaged by fraud.
• $0.4 million over four years beginning on July 1, 2024, to conduct a Gateway Review process throughout the proposal’s life to assure independent assurance, supervision, and delivery of the legislation.

The government will also improve the ATO’s capacity to prevent fraud by increasing the period it must inform a taxpayer if it plans to keep a business activity statement (BAS) return for further examination. The ATO’s obligatory notice period for BAS refund retention will be extended from 14 to 30 days to match time restrictions for non-BAS returns.

The longer term will help the ATO tackle fraud during major fraud occurrences like the one that launched Operation Protego. Legitimate refunds will be mostly impacted. Any legal refunds held for more than 14 days would result in the ATO paying interest to the taxpayer, as is presently the case. The ATO will disclose BAS processing times online.

This change is expected to raise collections by $302.2 million and payments by $187.4 million during the five-year period 2023-24.

 

Funding ATO’s priority goals

The ATO has received specific financing for critical goals. This includes:

Personal Income Tax – The ATO’s Personal Income Tax Compliance Programme will be extended for one year beginning July 1, 2027. This change is expected to raise collections by $180.3 million and payments by $44.3 million during the five years from 2023 to 2024.

Shadow Economy Compliance – The ATO’s Shadow Economy Compliance Programme will be extended for two years starting July 1, 2026. This proposal is expected to raise collections by $1.9 billion and payments by $610.2 million during the five years from 2023 to 2024. GST payments to states and territories have increased by $429.6 million.

Anti-avoidance taskforce – Extend the ATO’s Tax Avoidance Taskforce for two years beginning July 1, 2026. This move is expected to raise collections by $2.4 billion and payments by $1.2 billion during the five years from 2023 to 2024.

The Tax Avoidance Taskforce focuses on the top 1,100 public and multinational businesses, as well as the top 500 privately owned groups, but it also includes all 5,000 high wealth private groups with nett wealth greater than $50 million, as well as public and multinational businesses outside of the ATO’s justified trust programmes.

As of June 30, 2023, the taskforce has helped the ATO collect $32.7 billion in tax obligations.

Child care providers – will receive $4.8 million over four years, beginning in 2024-25, to guarantee acceptable interaction with the Australian tax system about the fitness and propriety standards of both current and new child care providers.

Identify checking – $155.6 million over two years, from 2024 to 2025, to maintain and improve the Government’s Digital ID, myGovID, and the system that enables approved access to a variety of government business services.

Migrant workers – $1.9 million in 2024-25 for a data-matching trial between the Department of Home Affairs and the Australian Taxation Office of income and employment data to reduce migrant worker exploitation and abuse of Australia’s labour market and migration system.

E-invoicing – $23.3 million over four years, beginning in 2024-25, to continue to oversee and operate the secure eInvoicing network as part of the government’s efforts to combat scams and online fraud through the implementation of mandatory industry codes established under a Scams Code Framework and increased use of the secure eInvoicing network.

Military invalidity payments – The Government will provide $11.9 million over five years from 2023-24 (and $0.9 million per year thereafter) to implement a social security means test for military invalidity payments impacted by the Federal Court’s decision in FCT v Douglas [2020] FCAFC 220. 

This strategy guarantees that the Douglas judgement has no effect on income support payment rates for veterans receiving invalidity payments from the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme as compared to pre-Douglas arrangements. 

In Douglas, the Full Federal Court determined that invalidity pensions paid under the Military Superannuation Benefits and Defence Force Retirement and Death Benefits schemes that began after September 20, 2007, were ‘superannuation lump sum payments’ rather than ‘superannuation income stream benefits’ under the ITAA 1997. 

 

Reduced sweet potato levy from 1 July 2024

From July 1, 2024, the government will reduce the total sweet potato tax rate from 1.5% to 0.5%. 

 

The broad anti-avoidance provisions have been gradually expanded since the Royal Assent to amended law.

The 2023-24 Budget provision to prolong Part IVA, which was slated to begin on July 1, 2024, has been postponed so that it would apply to income years beginning on or after the day the amending law obtains Royal Assent.

Part IVA includes the general anti-avoidance provision, which the ATO may use to challenge arrangements made in order to get tax advantages.

The proposal will broaden the scope of Part IVA, allowing it to apply to

• Schemes that decrease tax paid in Australia by allowing overseas citizens to pay their income with a reduced withholding tax rate.
• Schemes that provide an Australian income tax advantage, even when the primary goal was to decrease foreign income tax. 

 

Delays in streamlining gasoline and alcohol excise administration

The commencement dates for the following components of the Streamlining Excise Administration for Fuel and Alcohol Package will be adjusted.

• Streamlining licence application and renewal formalities from July 1, 2024 until the day after Royal Assent.
• The Australian Taxation Office will make a public record of excise licences and excise equivalent warehouse licences available on its website. It is now 30 days after the Act went into effect.
• Removal of regulatory restrictions to bunker fuels for commercial maritime industry – from July 1, 2024 until January 1, 2025. 

Australian plantation forestry firms are protected from thin cap adjustments.

Australian plantation forestry companies will be excluded from the new thin capitalisation earnings-based criteria.

The Multinational Tax Integrity Package, which was included in the October 2022-23 Budget, replaced the safe harbour and global gearing tests with earnings-based standards that restrict debt deductions depending on an entity’s profit.

Instead, Australian plantation forestry firms will be able to continue using the previous asset-based thin capitalisation standards. 

 

Measures that are not proceeding

Australian business number – The former government’s 2019-20 Budget item Black Economy — Strengthening the Australian Business Number System suggested commencement dates of July 1, 2021 and 2022. This bill will not advance.

Denying deductions for payments linked to intangibles held in low- or no-tax countries, as stated in the 2022-23 October Budget, will not be implemented. The Global Minimum Tax and Domestic Minimum Tax, which the government is implementing, will solve integrity concerns. 

The government will also implement a new provision beginning July 1, 2026, that imposes a penalty on taxpayers who are part of a group with more than $1 billion in global turnover per year and are found to have mischaracterised or undervalued royalty payments to which royalty withholding tax would otherwise apply. 

 

ATO has the option not to utilise refunds to offset past debts.

Debts ‘on hold’ prior to January 1, 2017.

The government will modify the tax legislation to enable the Commissioner of Taxation the authority not to use a taxpayer’s refund to balance past tax bills, but only for debts that were ‘on hold’ before January 1, 2017. This discretion will apply to individuals, small firms, and non-profit organisations, and it will continue the Commissioner’s present administrative approach.

In 2023, the Australian National Audit Office informed the ATO that omitting debt from offset was against the law, regardless of date the debt incurred. This amendment fixes a problem for the ATO with older debts while enforcing existing procedure for all debts beginning 1 January 2017. 

 

Pursuing liquidated corporations with outstanding superannuation payments from July 1, 2024.

The government has declared that it would restructure the Fair benefits Guarantee Recovery Programme to pursue outstanding superannuation benefits due by businesses in insolvency or bankruptcy beginning July 1, 2024.

The Fair rights Guarantee Recovery Programme seeks to increase the recovery of employment rights provided under the Fair Entitlements Guarantee (FEG). The FEG is a legal safety net system of last resort that provides help to qualifying workers. 

 

Payday super compliance

$60 million has been allocated over four years, from 2024-25, to expand the Productivity, Education, and Training Fund to promote practical initiatives by company and worker representatives to enhance workplace productivity and participate in tripartite collaboration. This will also help employers adopt legislative changes, such as the introduction of payday superannuation. 

Funding anti-money laundering and counter-terrorism finance reform Four years, from 2024-25.

The government would contribute $168 million over four years, starting in 2024-25, to improve Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

Following the publication of its first consultation document, the Attorney-General’s Department undertook a first round of consultations on proposed changes to modernise Australia’s anti-money laundering and counter-terrorism funding legislation from April to June 2023. The Department received 142 responses in response, which were generally supportive of change, including: 

• Simplification and modernising of the regime 
• Tranche-two entities are high-risk services supplied by experts such as attorneys, accountants, trust and company service providers, real estate specialists, and precious metals and stone dealers. 

 

Funding includes:

• The Australian Transaction Reports and Analysis Centre will get $160.8 million over two years (2024-25) to strengthen its regulatory, intelligence, and data capabilities and give assistance to newly regulated firms.
• The Attorney-General’s Department will receive $7 million over four years beginning in 2024-25 to support the implementation of legislative reforms through policy and legal advice and stakeholder consultation, as well as to deliver a programme of anti-money laundering and counter-terrorism financing capacity building in the Pacific. 

 

Preventing greenwashing and managing sustainable financial markets

Greenwashing – ASIC has received $10 million over four years, with an additional $1.9 million available to investigate and prosecute market players who engage in greenwashing and other sustainability-related financial crimes.

Green bonds – Treasury and APRA have received $5.3 million over four years from 2024-25, as well as $1.2 million on an ongoing basis, to deliver the sustainable finance framework, which includes issuing green bonds, improving data, and participating in the development of international regulatory regimes for sustainable finance.

Labelling regime – ASIC and Treasury have received $1.2 million to advise on the creation of a labelling system to govern the use of sustainability labels on retail investment products.