Key corporate tax measures in the 2024/25 Federal Budget

The 2024/25 Federal Budget has been handed down and as expected, while it included certain measures which will likely impact a number of corporate businesses (such as the circa $20 billion investment in 'Future Made in Australia' priority industries), the core focus was on the cost of living and personal tax measures.

Although there was little in the way of any broad and fulsome corporate tax reform, we take a closer look at some of the key corporate tax measures below.

Capital Gains Tax regime reform – foreign residents

The Federal Government announced that it will implement significant changes to the capital gains tax (CGT) regime in respect of foreign residents which will apply to "CGT events" commencing on or after 1 July 2025.

In line with past corporate tax measures aimed at foreign residents, the measure has been pitched as ensuring foreign residents pay their "fair share of tax" in Australia (even though there is no definition or reference to the concept of "fair share of tax" in any corresponding Australian income tax legislation).  

While little detail was provided in respect of the measure, the relevant Federal Budget papers did indicate that the measure will:

• ‘clarify’ and ‘broaden’ the types of assets that foreign residents are subject to CGT on;
• amend the point-in-time 'principal asset test' to a 365-day testing period (which will most likely be relevant for CGT assets which comprise indirect interests such as shares); and
• require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the Australian Taxation Office, prior to the transaction being executed.

In one sense this proposed measure will likely have a significant impact on the CGT implications for foreign residents on transactions on or after 1 July 2025.  Having said that, it is difficult to predict the full extent of the impact until draft legislation has been released.  

It is important to note that this measure is separate and distinct to the changes to the 'foreign resident capital gains tax withholding' (FRCGTW) regime which were announced late last year which are currently due to come into effect on 1 January 2025 (including the increase of the FRCGTW rate from 12.5% to 15% and the reduction of a specific FRCGTW threshold from $750,000 to $0).  

Intangibles

The Federal Government has announced that it will discontinue a previously announced (and controversial) measure to deny deductions for certain payments relating to intangibles held in low-tax or no-tax jurisdictions.

Instead the Federal Government will look to address some of the integrity issues covered by the aforementioned measure as part of the previously foreshadowed "Global Minimum Tax and Domestic Minimum Tax" as well as a new provision from 1 July 2026 that applies a penalty to taxpayers who are part of a group with more than $1 billion in global turnover annually that are found to have mischaracterised or undervalued royalty payments, to which royalty withholding tax would otherwise apply.

Extension of instant asset write-off

The instant asset write-off has been extended until 30 June 2025.  

In essence it allows small businesses with an aggregated annual turnover of less than $10 million to immediately deduct the cost of eligible assets if the cost of the asset is less than $20,000 and the asset was first used or installed ready for use by 30 June 2025.

As the aforementioned $20,000 asset threshold is applied on a 'per asset' basis, the instant asset write-off can potentially extend to multiple eligible assets of eligible small businesses.

Tax Avoidance Taskforce

The Federal Government has announced that it will extend the 'ATO Tax Avoidance Taskforce' (Taskforce) for two years from 1 July 2026.

While not a corporate tax measure in the strict sense, the tax compliance of corporate taxpayers will no doubt remain a core focus of the Australian Taxation Office as part of the activities undertaken by the Taskforce.

Authors

Cameron Forbes | Partner | +61 3 8080 3639 | cforbes@tglaw.com.au

Arthur Athanasiou | Partner | +61 3 8080 3563 | aathanasiou@tglaw.com.au

George Hodson | Partner | +61 8 8236 1397| ghodson@tglaw.com.au

Jeffrey Chang | Partner | +61 3 8080 3574 | jchang@tglaw.com.au

Paul Tanti | Partner | +61 8 8236 1327 | ptanti@tglaw.com.au

Philip de Haan | Partner | +61 2 9020 5703 | pdehaan@tglaw.com.au

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