Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon Wayne Swan MP)General outline and financial impact
Application of the income tax law to financial claims scheme entitlements
Schedule 1 to this Bill amends various Acts to ensure there are no adverse taxation implications arising from a payment made by the Australian Prudential Regulation Authority, or by a liquidator, under the financial claims scheme (the scheme).
It achieves this in general by amending the law to treat payments made under the scheme in the same way as if they had been made by the failed institution to which the scheme applies.
Specific amendments cover capital gains tax, farm management deposits, retirement savings accounts, first home saver accounts, reporting obligations and withholding obligations.
Date of effect : These amendments generally apply to all payments made, and other things done, under the scheme, whether before or after the amendments commence. Certain obligations and penalties only apply from the time the amendments commence.
Proposal announced : The scheme was announced in the Treasurer's Media Release No. 061 of 2 June 2008 and in the Prime Minister's Media Release of 12 October 2008.
Financial impact : Because it is not possible to determine whether the scheme will be activated during the forward estimates period, the revenue impact is unquantifiable but, if it is activated, the impact will be negligible because the tax outcomes are designed to be the same as if the payments had been made by the financial or insurance institution.
Compliance cost impact : Low.
Increase access to the small business capital gains tax concessions
Schedule 2 to this Bill amends the law to increase access to the small business capital gains tax (CGT) concessions for taxpayers owning a CGT asset used in a business by an affiliate or entity connected with the taxpayer and for partners owning a CGT asset used in the partnership business, with effect from the 2007-08 income year. This Schedule also makes a number of other minor amendments to clarify and refine elements of the small business CGT concessions.
Date of effect : The main amendments apply to CGT events happening in the 2007-08 income year and later income years. The minor amendments have their own particular application dates.
Proposal announced : This measure was announced in the 2008-09 Budget on 13 May 2008.
Financial impact : This measure will have an unquantifiable (but minimal to small) cost to revenue over the forward estimates.
Compliance cost impact : Compliance costs are expected to be low.
Tax benefits and capital gains tax
Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 to provide a general exemption from capital gains tax (CGT) for capital gains arising from a right or entitlement to a tax offset, deduction or similar benefit.
Date of effect : This measure applies to CGT events happening in the 2009-10 income year and later income years.
Proposal announced : This measure has not previously been announced.
Financial impact : Nil.
Compliance cost impact : Nil.
National Urban Water and Desalination Plan - urban water tax offset
Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 to provide a refundable tax offset in relation to certain projects approved under the National Urban Water and Desalination Plan.
Date of effect : This measure applies to approved projects between the 2008-09 and 2012-13 income years.
Proposal announced : This measure was announced in the 2008-09 Budget on 13 May 2008.
Financial impact : This measure will have these financial implications:
| 2008-09 | 2009-10 | 2010-11 | 2011-12 |
| -$14m | -$129m | -$195m | -$315m |
Compliance cost impact : The compliance cost impact of this measure is estimated to be moderate.
Deductible gift recipients
Schedule 5 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to update the list of the deductible gift recipients (DGRs) to include four new entities and to extend the time period of three organisations currently listed in the ITAA 1997.
Tax deductions are provided to donors who give to organisations that are endorsed as deductible gift recipients (DGRs), subject to certain conditions. Organisations which do not fall under the general DGR categories may seek specific listing in the income tax law.
Date of effect : The date of effect for each organisation being specifically listed is included in Tables 5.1 and 5.2 in Chapter 5.
Proposal announced : The listing of these organisations has not been announced.
Financial impact : This measure will have the following revenue implications:
| DGRs | 2008-09 | 2009-10 | 2010-11 | 2011-12 | 2012-13 | Total |
| Australasian College for Emergency Medicine | Nil | -$300,000 | -$307,500 | -$315,188 | -$323,067 | -$1,245,755 |
| Grattan Institute | Nil | -$1,500,000 | -$1,500,000 | -$300,000 | Nil | -$3,300,000 |
| PWR Melbourne 2009 Limited | Nil | -$600,000 | -$600,000 | Nil | Nil | -$1,200,000 |
| ACT Region Crime Stoppers Limited | Nil | -$10,500 | -$21,525 | -$22,063 | -$22,615 | -$76,703 |
| Yachad Accelerated Learning Project Limited | Nil | -$111,000 | Nil | Nil | Nil | -$111,000 |
| Bunbury Diocese Cathedral Rebuilding Fund | Nil | -$150,000 | -$300,000 | -$150,000 | Nil | -$600,000 |
| St George's Cathedral Restoration Fund | Nil | -$124,800 | -$166,400 | -$166,400 | -$41,600 | -$499,200 |
| Total | Nil | -$2,796,300 | -$2,895,425 | -$953,651 | -$387,282 | -$7,032,658 |
Compliance cost impact : Negligible.
Australian Business Register
Schedule 6 to this Bill amends the A New Tax System (Australian Business Number) Act 1999 (ABN Act) to allow the Registrar of the Australian Business Register (ABR) to act as the Multi-agency Registration Authority, to enable representatives of businesses to be identified for the purpose of communicating electronically with multiple government agencies on behalf of businesses. This is a part of the Government's Standard Business Reporting program.
Other amendments to the ABN Act improve the integrity and efficiency of the ABR and help position the Registrar to take on the role of the Multi-agency Registration Authority.
There are also two consequential amendments to other tax Acts that clarify the existing law.
Date of effect : The amendments to introduce the Multi-agency Registration Authority commence on a single day to be fixed by Proclamation but limited to a day not later than 12 months after Royal Assent.
The other amendments to the ABN Act and the consequential amendments commence on Royal Assent.
Proposal announced : This measure has not previously been announced.
Financial impact : Nil.
Compliance cost impact : There will be minimal additional costs imposed by the introduction of the Multi-agency Registration Authority and the other amendments to the ABN Act. However, this is far outweighed by the substantial reduction in costs that benefit businesses in their reporting to governments through the Standard Business Reporting program that is facilitated by the Multi-agency Registration Authority amendments.
Removing the Greenhouse Challenge Plus Programme condition for fuel tax credits
Schedule 7 to this Bill amends the Fuel Tax Act 2006 to remove the restriction that businesses may not claim more than $3 million of fuel tax credits in a financial year unless they are a member of Greenhouse Challenge Plus Programme.
Date of effect : This measure takes effect on 1 July 2009.
Proposal announced : This measure has not previously been announced.
Financial impact : Nil. This measure maintains businesses' ability to claim their full fuel tax credit entitlement.
Compliance cost impact : Nil.
Tax exemption for certain grants to businesses affected by the Victorian bushfires
Schedule 8 to this Bill amends the Income Tax Assessment Act 1997 to provide an exemption from tax for the Clean-up and Restoration Grants paid to small businesses and primary producers affected by the Victorian bushfires.
Date of effect : This measure applies to the Clean-up and Restoration Grants paid to small businesses and primary producers in the 2008-09 and 2009-10 income years.
Proposal announced : This measure has not previously been announced.
Financial impact : This measure will have these revenue implications:
| 2008-09 | 2009-10 | 2010-11 | 2011-12 | 2012-13 |
| Nil | -$3.1m | -$3.2m | -$0.3m | -$0.3m |
Compliance cost impact : Nil.