2.1  Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024

On 8th April 2024, Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024 (Cth) received royal assent. The new legislation significantly overhauls the “thin capitalisation” taxation framework. These revisions to the Income Tax Assessment Act 1936 (Cth), Income Tax Assessment Act 1997 (Cth), and the Taxation Administration Act 1953 (Cth) are designed to align with the Organisation for Economic Co-operation and Development’s (OECD) best practices, especially OECD BEPS Action 4, and will be effective from income years starting on or after 1 July 2023. 

What should foreign companies do?

The changes aim at multinational companies operating in Australia, imposing stricter limits on interest deductions and enhancing financial reporting transparency. Multinational corporates should be aware of these new interest deduction thresholds, as well as the new more stringent financial reporting requirements. 

2.2  Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2024 and Treasury Laws Amendment (Foreign Investment) Act 2024

The new Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2024 (Cth) and Treasury Laws Amendment (Foreign Investment) Act 2024 were introduced to “adjust the foreign investment framework to help boost Australia’s housing stock and provide more homes for Australians”. Some of the key amendments include:

1. the tripling the fees for giving notice in relation to the acquisition of interest in Australian land on which there is at least one established dwelling;
2. the doubling vacancy fees for established and new residential dwellings acquired on or after 7:30 pm on 9 May 2017; 
3. an increased fee cap (from AUD $1,119,100 to AUD$7,000,000) payable under Part 6 for a notice for an action or an exemption certificate or Part 6A of the Foreign Acquisitions and Takeovers Act; and 
4. international tax agreement provisions now being subject to Australia legislation, including all applicable Commonwealth, State or Territory laws. 

What should foreign companies do?

These legislative changes will have a substantial impact on foreign buyers acquiring Australian residential land, regardless whether they are a natural person or a property developer. International investors and property developers should thoroughly familiarise themselves with these changes as they may also impact project feasibilities.