When does a Tax Law Announcement Become Active
When an election is around the corner, there are usually many announcements made by the Government of the time to entice undecided voters to return their government for another term.
While many of these announcements are designed to be attractive, businesses and tax payers in Australia still need to understand where an announcement or intention becomes law.
At the time a change to the tax legislation is announced (with or without media fanfare), the change is not yet law.
The change will usually then be written into a bill and introduced to Parliament. Again, the change within this bill is not yet law.
If the bill is passed by both houses of Parliament and is given Royal Assent, it is then law.
Even if a change is announced to be effective from the date of the announcement (or earlier), taxpayers still need to abide by the legislation in effect at the time. Once the change becomes law, amendments can be made to capitalise or comply with the change to legislation.
For example, on 29 March 2019 the Government announced the intention to increase the instant asset write-off to $25,000, effective from the date of the announcement. This update has not passed through Parliament and is therefore not law.
As of the date of writing, the instant asset write-off is capped to assets valued to $20,000 and will reduce to $1,000 from 1 July 2020 per the current legislation.
Another example is the Superannuation Guarantee Amnesty. This was introduced as a bill to Parliament on 24 May 2018. The term of the amnesty (if passed) was from 24 May 2018 to 23 May 2019. Though the term of the amnesty is almost concluded, it has not in fact (as at writing) passed into law.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice
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