Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)General outline and financial impact
Tax concessions for philanthropy
Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to increase flexibility in the philanthropy measures and thereby encourage charitable giving in Australia.
Date of effect: These amendments apply to the first income year that starts after this Bill receives Royal Assent and to each later income year.
Proposal announced: These amendments were announced in the former Minister for Revenue and Assistant Treasurer's Press Release No. C037/04 of 11 May 2004.
Financial impact: The cost to revenue of allowing a franking credit refund to non-charitable ancillary funds and prescribed private funds is expected to be insignificant.
The cost to revenue of the remaining amendments are unquantifiable, but expected to be insignificant.
Compliance cost impact: These amendments will have minimal impact on compliance costs.
International shipping and airline profits
Schedule 2 to this Bill corrects an unintended outcome from the expansion of the foreign branch profits exemption. The unintended outcome means that foreign branch income and gains from the operation of ships or aircraft in international traffic are not being taxed in Australia nor in the country in which the company which owns the branch operates.
The expanded foreign branch income exemption will not apply to an Australian company's foreign branch income and gains from the operation of ships or aircraft in international traffic. This means that Australian companies will continue to be taxed in the same way as they were before the start of the expanded foreign branch income exemption.
Date of effect: Income years starting on or after 1 July 2004. The retrospective application date ensures no unintended consequences arise following the application of the New International Tax Arrangements (Participation Exemption and Other Measures) Act 2004.
Proposal announced: This measure was announced in the Minister for Revenue and Assistant Treasurer's Press Release No. 004 of 19 January 2005.
Financial impact: Nil.
Compliance cost impact: Nil.
Secrecy provisions
Schedule 3 to this Bill amends the Taxation Administration Act 1953 to allow disclosure of relevant information to the Corruption and Crime Commission of Western Australia.
Date of effect: The day after Royal Assent.
Proposal announced: Proposal not previously announced.
Financial impact: Nil.
Compliance cost impact: Nil.
Fringe benefits tax - rebatable employer status of certain government institutions
Schedule 4 to this Bill amends the Fringe Benefits Tax Assessment Act 1986 to correct an anomaly that allows government institutions that are charitable institutions at law to be eligible for fringe benefits tax rebatable employer status.
Date of effect: This amendment will apply from 1 July 2005.
Proposal announced: This measure has not previously been announced.
Financial impact: This measure has no financial impact if implemented. However, if this measure is not implemented the cost to the revenue will be $80 to $90 million per annum over the forward estimates period.
Compliance cost impact: This amendment is not expected to impact on compliance costs.
Dependent child age criterion
Schedule 5 to this Bill amends the Income Tax Assessment Act 1936 to standardise the age criteria for dependent children in respect of whom a taxpayer may be eligible for certain taxation concessions.
Date of effect: The proposed amendments apply to the 2005-06 income year and later years.
Proposal announced: This measure was announced in the 2004-05 Budget and in the former Minister for Revenue and Assistant Treasurer's Press Release No. C036/04 of 11 May 2004.
Financial impact: This measure is estimated to have an insignificant cost in 2005-06, $3 million in 2006-07 and $3 million in 2007-08.
Compliance cost impact: These amendments are expected to have a minimal impact on compliance costs.