Explanatory Memorandum
(Circulated by authority of the Minister representing the Treasurer, Senator the Hon. Peter Walsh)FINANCIAL IMPACT
TAXATION LAWS AMENDMENT BILL (NO.5) 1988
The removal of the income tax exemption for gold mining is estimated to raise $70m in 1991-92 and $300m per annum in subsequent years.
The cost to revenue of the rebate of tax in respect of lump sum payments in arrears is estimated to be $3m in 1988-89 and $1m in subsequent financial years.
The estimated revenue cost of the proposed amendments in respect of employee share acquisition schemes is $5m per annum for 1988-89, 1989-90 and 1990-91. The cost is expected to decline thereafter.
The transitional imputation arrangements are consequent on the reduction in the company tax rate, and their revenue implications form part of the estimated cost of that reduction, namely $110m in 1988-89 and $1,850m in 1989-90 (excluding life companies).
The new arrangements that are to apply to prepaid research and development expenditure will result in unquantifiable revenue gains.
The estimated cost of allowing investors in Australian films an immediate 100 per cent deduction for invested funds is $90m over a four year period, commencing with the 1989-90 financial year. This compares with $505m tax revenue forgone over the four income years ending 1986-87 under the present Division 10BA. There will also be an ongoing cost of $15m from existing investments under Division 10BA.
The amendment to Division 16G, which relates to debt creation involving non-residents, will have a negligible impact on revenue.
The revenue cost of extending the income tax gift provisions to admit the Australian National Gallery Foundation is estimated to be less than $0.5m for each of 1988-89 and 1989- 90.
The cost to the revenue of exempting from tax certain payments made under the Defence Service Homes Scheme is estimated to be $350,000 in 1988-89 and $50,000 in 1989-90.
The fringe benefits tax changes will have a negligible revenue effect.
The nature of the proposed amendment of the refund provisions of the sales tax law is such that a reliable estimate of the potential revenue effect cannot be made.
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) AMENDMENT BILL (NO.2) 1988
The amendments proposed by this Bill will ensure that measures contained in the Sales Tax (Exemptions and Classifications) Amendment Bill 1988 give full effect to sales tax changes announced in the 1988-89 Budget. The estimated revenue effect of the changes is set out in the explanatory notes on that Bill.
INCOME TAX RATES AMENDMENT BILL 1988
The estimated cost to revenue of the reduction in the company tax rate (and other associated rate reductions), not including any effect of proposed changes to life insurance taxation, is $110m in 1988-89 and $1,850m in 1989-90 and subsequent years.