Global Tax Alert | 12 February 2014

Australia issues paper on enhanced third party tax reporting for real estate, share market, credit card services and Government grants

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On 7 February 2014, the Australian Taxation Office (ATO) released a discussion paper on enhanced tax reporting for certain industry sectors including real estate, share market, credit card services and Government grants.

This is a priority for the Coalition Government and follows on from the 2013/2014 Federal Budget measure1 to improve compliance for Australian taxpayers and improve the pre-filling of tax returns. Currently, banks and managed funds provide such information through various processes.

The discussion paper asks for input on measures to establish new and strengthen existing reporting systems for:

  • Taxable government grants and specified other government payments;
  • Sales of real property, shares (including options and warrants), and units in managed funds;
  • Sales through merchant debit and credit services;
  • Managed investment trust and partnership distributions, company dividend and interest payments; and
  • Transactions reported to the ATO by the Australian Transaction Reports and Analysis Centre.

The proposed third party reporting regimes are outlined in the following sections of the discussion papers as outlined in the following table.

Section

Who does it apply to?

How could the reporting obligation work in practice?

2.1 - Sales of real property

Real property sales and transfers executed in all States and Territories.

The ATO could develop a single reporting specification which the States and Territories could use to update their systems to generate the report that is to be lodged with the ATO.

2.2 - Sales of shares and units

Transactions for shares in companies listed on a recognized stock exchange (listed companies) and sales of “private company” shares within the reporting regime.

The ATO could develop reporting specifications that reporters could use to update their business software to generate the report that is to be lodged with the ATO.

2.3 - Sales through merchant credit and debit services

Total business sales made by a merchant through a debit and credit card payment facility.

The ATO would develop reporting specifications that reporters could use to update their business software to generate the report that is to be lodged with the ATO.

2.4 - Government grants and payments

Payments that are not already subject to existing legislative reporting requirements (for example, the pay as you go withholding provisions that apply to employee salary and wage payments already have existing reporting requirements).

The existing taxable payments annual report could provide an appropriate reporting mechanism.

Importance and action required

The issue of enhanced third party reporting, pre-filing and data matching will be important for providers of share registries and purchasers and agents.

The ATO would initially seek to receive annual reports and then seek to move to quarterly, monthly or real time reporting. Accordingly, there will be an impact on processes and systems that will require updating.

This measure is currently scheduled to commence from 1 July 2014. The closing date for submissions is 11 March 2014.

Endnote

1. Budget Paper No 2 (p. 44).

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Australia), Brisbane
  • Paul Laxon
    +61 7 3243 3735
    paul.laxon@au.ey.com
Ernst & Young (Australia), Melbourne
  • Peter Janetzki
    +61 3 8650 7525
    peter.janetzki@au.ey.com
Ernst & Young (Australia), Sydney
  • Daryn Moore
    +61 2 9248 5538
    daryn.moore@au.ey.com
Ernst & Young (Australia), Perth
  • Craig Robson
    +61 8 9429 2271
    craig.robson@au.ey.com
Ernst & Young (Australia), Adelaide
  • Janet Finlay
    +61 8 8417 1717
    janet.finlay@au.ey.com
Ernst & Young LLP, Australian Tax Desk, New York
  • Michael Anderson
    +1 212 773 5280
    michael.anderson@ey.com

EYG no. CM4176