Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)General outline and financial impact
Schedule 1 - Medicare Levy and Medicare Levy Surcharge Income Thresholds
Outline
Schedule 1 to the main Bill amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 to increase:
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- the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the CPI;
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- the Medicare levy low-income thresholds for individuals and families eligible for SAPTO (along with the dependent child/student component of the family threshold), in line with movements in the CPI; and
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- the Medicare levy surcharge low-income threshold in line with movements in the CPI.
Date of effect
This measure applies to the 2021-22 income year and later income years.
Proposal announced
Schedule 1 to the main Bill fully implements the Personal income tax - increasing the Medicare levy low-income thresholds measure from the 2022-23 Budget.
Financial impact
This measure is estimated to decrease receipts by $90 million over the forward estimates period.
All figures in this table represent amounts in $m.
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| - | -20 | -20 | -30 | -20 |
- nil
Human rights implications
Schedule 1 to the main Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure will not have any ongoing compliance cost impact or additional impact on regulatory burden.
Schedule 2 - Deductibility of COVID-19 tests
Outline
Schedule 2 to the main Bill amends the ITAA 1997 by allowing an income tax deduction for taxpayers who incur relevant COVID-19 testing expenses in gaining or producing their assessable income. The deduction applies to relevant expenses incurred on or after 1 July 2021.
Date of effect
The amendments to the ITAA 1997 apply to losses and outgoings on or after 1 July 2021.
Proposal announced
Schedule 2 to the main Bill fully implements the tax deductibility of COVID-19 test expenses measure announced on 7 February 2022.
Financial impact
The measure is estimated to have a significant but unquantifiable cost to receipts over the forward estimates period.
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| * | * | * | * | * |
*unquantifiable
Human rights implications
Schedule 2 to the main Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure will have a negligible compliance cost.
Schedule 3 - Deductible gift recipients-new specific recipients
Outline
Schedule 3 to the main Bill amends the ITAA 1997 to allow the following entities to be deductible gift recipients under the income tax law:
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- Royal Humane Society of New South Wales Incorporated;
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- Perth Korean War Memorial Committee Incorporated;
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- Greek Orthodox Archdiocese of Australia Consolidated Trust Cathedral of the Annunciation of our Lady Restoration Fund;
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- The Australian Future Leaders Foundation Limited;
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- Lord Mayor's Charitable Foundation; and
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- The Ramsay Centre for Western Civilisation Limited.
Date of effect
The amendments apply to gifts made on and after 1 July 2020 to the Royal Humane Society of New South Wales Incorporated.
The amendments apply to gifts made on and after 1 July 2021 and before 1 July 2024 to:
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- Perth Korean War Memorial Committee Incorporated; and
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- Greek Orthodox Archdiocese of Australia Consolidated Trust Cathedral of the Annunciation of our Lady Restoration Fund.
The amendments apply to gifts made on and after 1 July 2021 to:
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- The Australian Future Leaders Foundation Limited;
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- Lord Mayor's Charitable Foundation; and
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- The Ramsay Centre for Western Civilisation Limited.
Proposal announced
Schedule 3 to the main Bill partially implements the measure Philanthropy - updates to the list of specifically listed deductible gift recipients from the 2020-21 Budget.
This Schedule partially implements the measure Philanthropy - updates to the list of specifically listed deductible gift recipients from the 2021-22 MYEFO.
Financial impact
Specifically listing the Perth Korean War Memorial Committee Incorporated, Greek Orthodox Archdiocese of Australia Consolidated Trust Cathedral of the Annunciation of our Lady Restoration Fund, The Australian Future Leaders Foundation Limited, Lord Mayor's Charitable Foundation and The Ramsay Centre for Western Civilisation Limited was part of the 2021-22 MYEFO measure Philanthropy - updates to the list of specifically listed deductible gift recipients. This measure, which included specific listings for two other organisations, was estimated to decrease receipts by $1.7 million over the forward estimates period.
Specifically listing the Royal Humane Society of New South Wales Incorporated was part of the 2020-21 Budget measure Philanthropy - updates to the list of specifically listed deductible gift recipients. This measure, which included specific listings for several organisations, was estimated at the 2020-21 Budget to decrease receipts by $4.1 million over the period from 2020-21 to 2023-24.
Human rights implications
Schedule 3 to the main Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure is expected to have a low impact on compliance costs.
Schedule 4 - Employee Share Schemes
Outline
Schedule 4 to the main Bill makes it easier for businesses to create employee share schemes. This Schedule provides regulatory relief to employee share schemes which meet particular requirements.
Date of effect
The amendments in Schedule 4 to the main Bill commence 6 months after Royal Assent.
Proposal announced
Schedule 4 to the main Bill implements:
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- the Small Business Package - finance and cash flow measure from the 2018-19 MYEFO;
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- the Employee Share Schemes - removing cessation of employment as a taxing point and reducing red tape measure from the 2021-22 Budget; and
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- the Employee Share Schemes - further reducing red tape measure from the 2022-23 Budget.
Financial impact
Schedule 4 to the main Bill will have an unquantifiable impact on receipts over the forward estimates period.
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| - | * | * | * | * |
- nil
* unquantifiable
Human rights implications
Schedule 4 to the main Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
It is expected that this measure will reduce compliance costs for businesses creating employee share schemes.
Schedule 5 - Varying the GDP uplift factor for tax instalments
Outline
Schedule 5 to the main Bill amends the TAA 1953 to reduce the GDP adjustment factor for the 2022-23 income year to 2 per cent. The GDP adjustment factor is applied by the Commissioner to work out the amount of PAYG and GST instalments payable by a taxpayer in certain circumstances.
Date of effect
This measure will apply for the purposes of working out the amount of PAYG and GST instalments for instalment quarters that fall due for the 2022-23 income year.
Proposal announced
Schedule 5 to the main Bill fully implements the Lowering tax instalments in 2022-23 measure announced on 23 March 2022.
Financial impact
This measure is estimated to have the following impact on the underlying cash balance over the forward estimates period.
All figures in this table represent amounts in $m.
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| - | -1,800 | 1,800 | - | - |
- nil
Human rights implications
Schedule 5 to the main Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure does not have any compliance cost impact.
Schedule 6 - Low and middle income tax offset
Outline
Schedule 6 to the main Bill amends the ITAA 1997 to increase the low and middle income tax offset for the 2021-22 income year by $420 to ease cost of living pressures for Australians.
Date of effect
The amendments to the low and middle income tax offset in Schedule 6 to the main Bill apply to the 2021-22 income year.
Proposal announced
Schedule 6 to the Bill fully implements Cost of living tax offset measure from the 2022-23 Budget.
Financial impact
This measure is estimated to decrease receipts by $4.1 billion over the forward estimates period.
All figures in this table represent amounts in $m.
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| 0 | -3,900 | -200 | .. | 0 |
.. is used to indicate that the financial impact is not zero but is rounded to zero.
Human rights implications
Schedule 6 to the main Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure is expected to only have a minor regulatory impact.
Schedule 7 - Safety Net Thresholds
This Schedule was prepared by the Department of Health.
Outline
There are two PBS safety net thresholds - concessional and general. The general patient safety net threshold is currently $1,542.10, which equates to approximately 36 general patient co-payments. The concessional safety set threshold is currently $326.40 which is the equivalent to 48 concessional patient co-payments.
The purpose of Schedule 7 to the main Bill is to amend the National Health Act 1953 to lower the PBS safety net thresholds for the concessional safety net to 36 scripts (from 48) and general to $1457.10 (from $1542.10) on 1 July 2022.
Date of effect
This change will come into effect on 1 July 2022 and will apply to any concessional and general patient safety net thresholds on that date.
Proposal announced
Schedule 7 to the main Bill fully implements a measure from the 2022-23 Budget.
Financial impact
The change to the safety net thresholds, as outlined in Schedule 7 to the main Bill, is estimated to deliver increased net expenditure of $525.3 million over four years to 2025-26 (underlying cash).
Human rights implications
Schedule 7 to the main Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure does not have any compliance cost impact.
Schedule 8 - 2022 cost of living payment
This Schedule was prepared by the Department of Social Services and the Department of Veterans' Affairs.
Outline
Schedule 8 to the main Bill provides for the payment of 2022 cost of living payment of $250 to around 6 million Social Security and Veterans' income support and compensation recipients, Farm Household Allowance recipients, and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Veteran Gold Card.
To be qualified for the 2022 cost of living payment, a person must be residing in Australia and be receiving one of the qualifying payments or hold or have claimed and qualified for one of the qualifying concession cards on 29 March 2022.
Date of effect
Schedule 8 to the main Bill commences the day after the main Bill receives Royal Assent.
Proposal announced
Schedule 8 to the main Bill fully implements a measure from the 2022-23 Budget.
Financial impact
This measure is estimated to have a financial impact of $1,517.2 million in 2021-22 income year.
Human rights implications
Schedule 8 to the main Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure does not have any compliance cost impact.
Schedule 9 - Fuel duty consequential amendments
Customs Tariff Amendment (Cost of Living Support) Bill 2022
Excise Tariff Amendment (Cost of Living Support) Bill 2022
Outline
The Excise Bill and Customs Bill amend the Excise Tariff Act and the Customs Tariff Act respectively to temporarily reduce the excise duty rates and excise-equivalent customs duty rates for fuels, including petrol and diesel and similar petroleum-based products, including oils and grease.
These changes assist in temporarily easing cost of living and business pressures by providing a temporary reduction in fuel excise and customs duties.
Date of effect
The amendments commence on 30 March 2022.
Proposal announced
The Excise Bill and the Customs Bill and Schedule 9 to the main Bill fully implement the 50 per cent reduction for six months in fuel excise and excise-equivalent customs duty measure from the 2022-23 Budget.
Financial impact
The measure is estimated to have the following impact to underlying cash over the forward estimates period.
All figures in this table represent amounts in $m.
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| -1,870 | -1,105 | 0 | 0 | 0 |
Human rights implications
The Excise Bill and the Customs Bill and Schedule 9 to the main Bill do not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 10.
Compliance cost impact
This measure is expected to have a low impact on compliance costs.