Explanatory Memorandum
(Circulated by authority of the Minister for Veterans' Affairs, The Honourable Danna Vale MP)Schedule 4 - Consequential amendments of Income Tax Assessment Acts
Part 1 - Amendments of the Income Tax Assessment Act 1936
Part 1 of Schedule 4 contains consequential amendments of the Income Tax Assessment Act 1936.
Part 2 - Amendments of the Income Tax Assessment Act 1997
Part 2 of Schedule 4 contains consequential amendments of the Income Tax Assessment Act 1997.
Item 10 repeals the existing sections 51-32 and 51-33 and substitutes new sections. Proposed section 51-32 provides that compensation payments for the loss of certain tax exempt payments are exempt from income tax. Proposed section 51-33 provides that compensation payments for the loss of pay and/or certain tax exempt allowances as a Defence reservist are exempt from income tax.
The provisions deal with the position under both the SRCA and the proposed MRCA.
The provisions are wider in scope than the existing provisions because they address anomalies in the existing provisions and in particular in relation to the treatment of non-warlike service.
Item 11 inserts Subdivision 52-CA that sets out all the exempt payments under the proposed MRCA.
Part 3 - Application and amendment of assessments
This Part ensures that members and former members who are covered by the SRCA are treated equitably vis-à-vis those covered under the MRCA and to bring the law into line with existing administrative practices. The amendments made to subsections 51-32(1) and (4) and 51-33(1) by Schedule 4 will apply to assessments for the 1996-97 income year and later years of income. The other amendments made by Schedule 4 will apply to assessments for the 2004-05 income year and later income years.