The second tranche of the Federal Budget legislation has been released with feedback requested by 21 August, providing interested parties with barely two weeks to consider and evaluate the proposed changes.

Unfortunately for taxpayers, this second tranche is not the trust taxation changes that have been proposed and on which a significant amount of clarity is still required, but rather it’s the first round of changes to the recently enacted law. Yes, you read that correctly, the second tranche (which consists of four different pieces of legislation) makes further amendments to the law and / or repeals and corrects the changes recently enacted.

The government continue to churn out legislation rather than fully consider the impact of the changes and work through the more complex situations before they deliver a consolidated and considered piece of law.  The explanatory memorandums (“EM”) accompanying the proposed law make further promises of more changes to come to deal with “complex situations”. Even the EMs look rushed with spelling mistakes and an example of the apportionment method indicating that indexation increases a capital loss.

The continuing nature of the changes and amendments reinforces the feeling that the tax changes were not fully thought through and the legislation giving effect to the changes (both rounds 1 and 2) were / are rushed.  The approach to the changes appears to be something of a patchwork quilt of legislation seeking to fix errors and oversights in the original legislation.

The exposure draft legislation released covers the following four areas, click each title for more detail:

• Negative Gearing Changes;
• The definition of New Residential Dwellings;
• The method for apportioning Capital Gains and Losses;
• Indexation changes and other matters.

Whilst the attempt of the government to provide fast paced change and legislative action is welcomed, the lack of understanding of the impact and complexity of the changes made or proposed is startling – perhaps the government should have “more haste, less speed”.  In what could have been a single round of legislation, the changes are now likely to span upwards of six pieces of interlocking and interdependent legislative amendments.

As more announcements are made and guidance is provided, we will keep you updated.   In the meantime, if you have any questions about how the changes, enacted or announced, impact you, please contact your ESV Engagement Partner.