2019-20 Federal Budget Report: Business Taxation - Integrity Measures

The Government is targeting key risk areas to ensure proper compliance. In a welcome relief, the Government will defer the start date of the proposed Division 7A ‘deemed dividend’ integrity measures.


What was announced

  • Deferral of the start date of proposed amendments to Division 7A
  • Increasing engagement and on‑time payment of tax and superannuation liabilities
  • Expanding the ATO Tax Avoidance Taskforce
  • Expanding investigations into the commercial construction sector
  • Single Touch Payroll – expansion
  • Increased funding to establish a sham contracting unit

Deferral of the start date of proposed amendments to Division 7A

The Government will defer the start date of the previously announced amendments to Division 7A to  1 July 2020. The proposed measures are significant and could result in an increased tax burden for certain taxpayers which they may find difficult to fund.

The Government issued a consultation paper in October 2018 seeking views on the proposed implementation approach for the amendments to Division 7A. Implementation issues were raised during the consultation that warrant further consideration.

Delaying the start date by 12 months will allow additional time to further consult with stakeholders on these issues and to refine the Government’s implementation approach, including ensuring appropriate transitional arrangements so taxpayers are not unfairly prejudiced. 

Increasing engagement and on‑time payment of tax and superannuation liabilities

The Government will provide $42.1 million over 4 years to the ATO to increase debt collection activities to recover unpaid tax and superannuation liabilities.

These activities will focus on larger businesses and high wealth individuals to ensure on‑time payment of their tax and superannuation liabilities. The measure will not extend to small businesses.

Expanding the ATO Tax Avoidance Taskforce

The Government will provide $1 billion over four years from 1 July 2019 to the ATO to extend the operation of the Tax Avoidance Taskforce and to expand the Taskforce’s programs and market coverage.

The Taskforce undertakes compliance activities targeting multinationals, large public and private groups, trusts and high wealth individuals. This measure will allow the Taskforce to expand these activities, including increasing its scrutiny of specialist tax advisors and intermediaries that promote tax avoidance schemes and strategies.

Expanding investigations into the commercial construction sector

The Government will provide $9.4 million over 4 years from 1 July 2019 to the Australian Competition Consumer Commission (ACCC) to continue and expand investigations in the commercial construction sector.

Single Touch Payroll – expansion

The Government will provide $82.4 million over 4 years from 1 July 2019 to the ATO and the Department of Veterans’ Affairs to support the expansion of the data collected through Single Touch Payroll (STP) by the ATO and the use of this data by Commonwealth agencies.

STP data will be expanded to include more information about gross pay amounts and other details. These changes will reduce the compliance burden for employers and individuals reporting information to multiple Government agencies.

Increased funding to establish a sham contracting unit

The Government will provide $9.2 million over 4 years from 1 July 2019 (and $2.3 million per year thereafter) to establish a sham contracting unit within the Fair Work Ombudsman to address sham contracting behaviour engaged in by some employers, particularly those who knowingly or recklessly misrepresent employment relationships as independent contracts to avoid statutory obligations and employment entitlements.