House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Peter Costello MP)

General outline and financial impact

Child care tax offset

Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 by introducing a 30 per cent tax offset for 'out-of-pocket' child care expenses, that is, fees incurred for approved child care less child care benefit, up to a maximum of $4,000 per child.

Schedule 1 also makes consequential amendments to the Taxation Administration Act 1953 and the A New Tax System (Family Assistance) (Administration) Act 1999 .

Date of effect : The child care tax offset will apply to fees for approved child care incurred since 1 July 2004 and can be claimed in the 2005-06 income tax return.

Proposal announced : This measure was announced by the Government in its election statement Extra Assistance for Families on 26 September 2004. Further policy details were provided in the Treasurer's Press Release No. 108 of 20 December 2004.

Financial impact : This measure will have a cost to revenue as follows:

Compliance cost impact : Nil.

Deductible gift recipients

Schedule 2 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to update the lists of deductible gift recipients (DGRs).

Date of effect : Deductions for gifts to the following organisations that are listed as DGRs under this Schedule, apply as follows:

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ACT Playgroups Association Incorporated from 15 April 2005.

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Crime Stoppers Northern Territory Program from 14 March 2005.

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Playgroup Association of Northern Territory Incorporated from 25 May 2005.

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Playgroup NSW (Inc). from 15 April 2005.

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Playgroup Queensland Incorporated from 15 April 2005.

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Playgroup Tasmania Inc. from 15 April 2005.

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Playgroup WA (Inc) from 14 March 2005.

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The Chifley Research Centre Limited from 20 May 2005.

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The Rotary Club of Katoomba Inc - Convict Roadbuilders and Pioneer Memorial Wall Fund from 25 May 2005 until 24 May 2006.

In addition, this Schedule repeals the DGR listing of the Herbert Vere Evatt Memorial Foundation Incorporated with effect from 20 May 2005.

Proposal announced : The deductibility of gifts to the Playgroups associations was announced in the former Minister for Revenue and Assistant Treasurer's Press Release No. C059/05 of 25 June 2004.

Financial impact : The cost to revenue of the DGR listings of the Rotary Club of Katoomba Inc - Convict Roadbuilders and Pioneer Memorial Wall Fund is $200,000.

The cost to revenue of the remaining DGR listings is unquantifiable but is likely to be insignificant.

Compliance cost impact : Nil.

Secrecy provisions

Schedule 3 to this Bill amends the Income Tax Assessment Act 1936 to expand the purposes for which business tax income information may be disclosed to the Australian Statistician.

Date of effect : The day after Royal Assent.

Proposal announced : This measure has not previously been announced.

Financial impact : Nil.

Compliance cost impact : Nil.

Scheme to extend the wine equalisation tax rebate to New Zealand wine producers

Schedule 4 to this Bill amends the A New Tax System (Wine Equalisation Tax) Act 1999 to create a specific scheme to provide administrative arrangements to facilitate access to the existing wine producer rebate by New Zealand wine producers whose wine is exported to the Australian market (the New Zealand wine producer rebate).

Date of effect : The New Zealand wine producer rebate commences from 1 July 2005. The New Zealand wine producer rebate can be claimed in relation to wine that has had wine equalisation tax (WET) paid on it on or after 1 July 2005.

Proposal announced : This measure was announced in the Treasurer's Press Release No. 007 of 17 February 2005 and the 2005-06 Budget.

Financial impact : This measure will have a cost to revenue as follows:

Compliance cost impact : Compliance costs will be relevant to those New Zealand wine producers who choose to access the New Zealand wine producer rebate. These producers must seek approval as New Zealand participants, lodge claims for the rebate and keep records to substantiate that WET has been paid on their wine that is exported to Australia.