Explanatory Memorandum
Circulated By the Authority of the Treasurer, the Hon Wayne Swan MPChapter 4 - Continence Aids Payment Scheme
Outline of chapter
4.1 Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to ensure that payments made under the Continence Aids Payment Scheme are exempt from income tax.
Context of amendments
4.2 The Continence Aids Payment Scheme was announced as part of the 2009-10 Budget to replace the existing Continence Aids Assistance Scheme. The Continence Aids Assistance Scheme involved the direct provision of continence products to eligible recipients.
4.3 Payments under the Continence Aids Payment Scheme will assist eligible people who have permanent and severe incontinence to meet some of the costs of their continence products.
4.4 The provision of a direct payment to clients will allow recipients increased flexibility and choice in their continence products.
4.5 The direct provision of products under the current Continence Aids Assistance Scheme is not subject to income tax. However, as other similar welfare type payments are subject to tax, the specific exemption is required to ensure that recipients of this payment are not disadvantaged.
Summary of new law
4.6 This amendment provides that from 2009-10 income year, no income tax will be paid by recipients on the receipt of a payment under the Continence Aids Payment Scheme.
Comparison of key features of new law and current law
| New law | Current law |
| A specific exemption from income tax for payments made under the Continence Aids Payment Scheme package is expressly exempt from income tax. | Payments made to recipients of the Continence Aids Payment Scheme may be subject to income tax. |
Detailed explanation of new law
4.7 Payments made to eligible recipients under the Continence Aids Payment Scheme are exempt from income tax . [Schedule 4, item 2, section 52-170]
4.8 As such, these payments will be subject to the provisions of the ITAA 1997 dealing with amounts of exempt income.
Application and transitional provisions
4.9 These amendments apply to amounts received in the 2009-10 income year and later income years.
Consequential amendments
4.10 The checklist of exemptions from income tax has been updated . [Schedule 4, item 1, section 11-15]