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Expansion of the general anti-avoidance rule

The 2023-24 Australian Federal Budget updates the scope of the general anti-avoidance rule for income tax (Part IVA of the Income Tax Assessment Act 1936) expanding it to apply to schemes that:

  • reduce tax paid in Australia by accessing a lower withholding tax rate on income paid to foreign residents or

  • achieve an Australian income tax benefit, even where the dominant purpose was to reduce foreign income tax.

This change applies to income years starting on or after 1 July 2024, even if the scheme was entered into before that date. Businesses should seek advice and review any transactions they have entered into, or propose to enter into, to ensure that they have evidence that commercially supports the tax positions adopted.

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