What we know so far | Federal Budget October 2022

What we know so far | Federal Budget October 2022

It would appear to us that the stage three tax cuts which are still L-A-W law are unlikely to survive in their current form but equally we don’t think we’ll see announced changes to them in the budget on Tuesday night.

What we are likely to see though is some further announcements around multinational taxation. In particular, if you are the Australian subsidiary of a foreign controller, or you as an Australian entity control an entity offshore and you have interest deductions, then you’re going to have to redo your thin capitalisation calculations, the law almost certainly will change.

More interestingly perhaps, those in the business of buying name-brand products from offshore may get caught up in some new rules that the Government is proposing to tax royalty payments which are embedded in the price of name-brand goods; watch this space.

Finally, and perhaps more controversially, there is a proposal to publish companies’ country-by-country reporting information.  It will be interesting to see if there is any international backlash against that and whether the Government will push forward with those amendments.

In news around other tinkering, it looks like the Government is going to remove the retrospectivity from the dividend franking amendments. At BDO, we are pleased about that because our feedback, along with much of the rest of the industry, was that the retrospectivity element was entirely inappropriate.

There are likely to be some other little changes such as changes to FBT record keeping which is long overdue. FBT is a terribly complex tax for the amount of revenue it actually raises for the Government. And some changes to confirm that crypto currency is not a foreign currency and to therefore tax it appropriately.

Finally, what to do we hope to see on Tuesday night? We really hope the Government expresses a desire to engage in a proper tax reform discussion with the Australian public, but we will have to wait until then to see.

For more information or media enquiries: jotham.lian@bdo.com.au and jane.ward@bdo.com.au