Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)Chapter 13 Technical clarification of time for certain amended assessments
Outline of chapter
13.1 Schedule 13 to this Bill amends the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 to clarify that the repeal of the six-year amendment period for general anti-avoidance (Part IVA) amendments only applies to assessments for the 2004-05 income year and later income years, as originally intended by the Government.
Context of amendments
13.2 In the Treasurer's Press Release No. 106 of 16 December 2004, the Government announced that a four-year amendment period for tax avoidance schemes would apply to assessments for the 2004-05 income year and later income years. However, while the amending Act reduced the period for review and amendment of assessments involving determinations under Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936), from six to four years, a particular application date was not specified. Without clarification, the four-year period of review in the new subsection 170(1) of the ITAA 1936 could be thought to apply from the date of Royal Assent to the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 .
13.3 The Government is acting to clarify this matter in line with the announced policy intent.
Summary of new law
13.4 The new four-year amendment period for the Commissioner of Taxation (Commissioner) to give effect to Part IVA will apply only to assessments for the 2004-05 income year and subsequent income years, in line with the original Government announcement.
Detailed explanation of new law
13.5 Item 68 of the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 , which specified that certain consequential amendments would apply to assessments for the 2004-05 income year and later income years, is extended to apply to items 64 and 65 of the same Act. Items 64 and 65 of that Act repealed the six-year amendment period for income tax assessments where the Commissioner relies on Part IVA to amend an assessment. [Schedule 13, item 1]
13.6 The technical clarification ensures the ability of the Commissioner to make amended assessments as if it had been in force on the day the original amendment to items 64 and 65 of the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 was made. [Schedule 13, item 2]