The accuracy of the content is not guaranteed. Please rely only on the authorised document. The Assistant Treasurer, Senator Rod Kemp, today announced that the Government will be introducing amendments to address aggressively marketed employee benefit arrangements. Details of the proposed amendments are attached. This move is necessary following Tax Office advice that these arrangements are still being actively promoted. The arrangements have continued despite the Taxation Commissioner’s clear advice that the schemes are ineffective under existing law. The Commissioner will continue to amend the assessments of taxpayers who have entered into these arrangements. Taxpayers who disagree with the Commissioner’s view have the right to pursue the matter in the courts. The Government remains committed to ensuring that tax avoidance arrangements do not succeed and that all Australians pay their fair share of tax. The arrangements as promoted seek to achieve far more concessional treatment than was ever intended by Parliament. Specifically the Government is acting to remove deductibility for contributions to non-complying superannuation funds (including off-shore arrangements) as these funds are not used for retirement income purposes and are not subject to prudential regulation. The Government is also clarifying the law to make clear that for the purpose of obtaining a deduction for superannuation contributions, an employer and an employee cannot be the same person. This is consistent with the Commissioner’s view of how the law currently operates. The Commissioner’s view is supported by Senior Counsel. These amendments, which will be introduced into Parliament as soon as possible, will remove any doubt about the application of the law and will apply from 4pm today. In addition, Senator Kemp has asked the Tax Office to review the interaction of the income tax and fringe benefits tax laws to ensure that employee benefit trusts and employee share plans are taxed appropriately. The Tax Office has advised the Government that some variations of earlier arrangements are being marketed. If legislative change is necessary to combat the ongoing marketing of these schemes, further amendments will be introduced. CANBERRA Meaning of "eligible employee" The definition of "eligible employee" in section 82AAA of the Income Tax Assessment Act 1936 will be amended to put beyond doubt that a taxpayer and an "eligible employee" cannot be the same person. This will ensure that no deduction is allowable under section 82AAC for contributions made by a taxpayer to a complying superannuation fund for the purpose of making provision for superannuation benefits for him or herself. A taxpayer will still continue to be entitled to a deduction for contributions made in respect of employees, other than him or herself, of a company in which the taxpayer has a controlling interest. Such contributions are taxable in the fund under section 274 of the Act. Contributions to non-complying superannuation funds Section 82AAE of the Income Tax Assessment Act 1936 will be repealed and section 8-1 of the Income Tax Assessment Act 1997 will be amended to preclude a deduction for contributions to a non-complying superannuation fund.
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