House of Representatives

Explanatory Memorandum

(Circulated by the Treasurer, the Rt. Hon. William McMahon).

Main Features

INCOME TAX BILL 1969

INCOME TAX (PARTNERSHIPS AND TRUSTS) BILL 1969

The purpose of these two Bills is to declare the rates of income tax payable for the current financial year, 1969-70.

The Income Tax Bill 1969 declares the rates of tax payable by companies and the ordinary rates of tax payable by other taxpayers. It also continues for the 1969-70 financial year the additional levy of 2 1/2 per cent of the tax otherwise payable by individuals.

The Income Tax (Partnerships and Trusts) Bill 1969 declares the special rates of tax payable in respect of certain partnership, trust and superannuation fund income.

Except for changes proposed in the age allowance, the Bills have the same practical effects as the measures declaring the rates of tax for the 1968-69 financial year. The following notes are, therefore, restricted to the provisions of the Bills relating to the age allowance.

Clause 9 of the Income Tax Bill 1969 authorises the special concessions for aged persons commonly known as the age allowance.

These concessions are available to persons who have been residents of Australia throughout the year of income and who, at the end of the year, have attained the age of 65 years, if men, or, if women, the age of 60 years.

In 1968-69 this allowance exempted from tax an aged person whose taxable income did not exceed $1,248. A married aged person contributing to the maintenance of his or her spouse who also met the residential qualification was exempt if the combined taxable income of husband and wife did not exceed $2,184. These exemptions levels are to be raised for 1969-70 to $1,300 and $2,262 respectively.

For aged persons whose incomes are somewhat above these exemption levels, clause 9 imposes a limit on the amount of tax that otherwise would be payable. The purpose of these limiting provisions is to cushion the transition from complete exemption to taxation at ordinary rates of tax. In 1968-69 these provisions conferred benefits on aged persons whose taxable incomes did not exceed $1,532 and on married aged persons where the combined taxable income of the couple did not exceed $3,514. For 1969-70 these limiting provisions will apply to a taxpayer whose own taxable income is between $1,300 and $2,275 or, where the taxpayer is assessed under the married couple provisions, if the combined taxable income of the couple is between $2,262 and $4,121. (By clause 7 of the Income Tax (Partnerships and Trusts) Bill 1969 aged taxpayers whose taxable incomes do not exceed the upper limits of these ranges will not be called upon to pay further tax, in respect of certain partnership income, under section 94 of the Income Tax Assessment Act).

The tax payable in 1968-69 by an aged person where the taxable income fell within the limiting range was limited to nine- twentieths of the amount by which the taxable income exceeded the exemption level, plus the 2 1/2 per cent additional levy. For 1969-70 the tax limitation will be calculated by applying to the amount by which the taxable income exceeds the relevant exemption level the several rates prescribed for this purpose by the Sixth and Seventh Schedules to this Bill. These rates (which will not be increased by the 2 1/2 per cent additional levy) are summarised in the following tables: