Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)Clauses Involved in the Proposed Amendments
Clause 1: Stipulates the short title of the Act as being Taxation Laws Amendment Act 1993.
Clause 2: Stipulates the commencement dates of the provisions of the Bill.
Fringe Benefits Tax Assessment Act 1986 ("FBTAA")
[See pages 25-26 for further details]
Clause 3: Defines "Principal Act" as meaning the Fringe Benefits Tax Assessment Act 1986 for the amendments proposed in Part 2 of the Bill.
Clause 4: Substitutes the words "Commonwealth Savings Bank of Australia" with the words "Commonwealth Bank of Australia" in subsection 136(1) of the FBTAA.
Clause 5: Commencement date for the amendment in Clause 4.
Clause 6: Substitutes the word "subsection" with the word "section" in paragraph 37(b) of the FBTAA.
Income Tax Assessment Act 1936
Clause 7: Defines "Principal Act" as meaning the Income Tax Assessment Act 1936 for the amendments proposed in Part 3 of the Bill.
Shrine of Remembrance Restoration and Development Trust
[See page 27 for further details]
Subclause 8(a): Proposes to insert new subparagraph 78(1)(a)(cx) into the Act, to ensure that gifts made to the Shrine of Remembrance Restoration and Development Trust are tax deductible.
Subclause 8(b): Proposes to insert new subsection 78(6AM) into the Act, to limit the deductibility of gifts made under subparagraph 78(1)(a)(cx) to those gifts that are made on or after 25 November 1992 and on or before 30 June 1995.
Capital Gains Tax - Depreciable Property Installed on Crown Leases
[See pages 29-37 for further details]
Clause 9: Is a technical amendment to insert a reference to new Division 5B of Part IIIA [see Clause 11 ] in the section 110 definition of "notional Part IIIA disposal", relevant for the provisions dealing with the taxation of certain income of life assurance companies.
Clause 10: Is also a technical amendment to insert a reference to new Division 5B of Part IIIA [see Clause 11 ] in the section 116E definition of "notional Part IIIA disposal", relevant for the provisions dealing with the taxation of the annuity and insurance business of certain registered organisations.
Clause 11: Inserts new Division 5B [sections 160ZWB to 160ZWD] in Part IIIA [capital gains and capital losses]. This Division contains measures to ensure that the capital gains tax provisions will treat certain disposals of assets comprising plant installed on Crown leases in a manner consistent with their treatment under the depreciation Crown lease provisions.
Clause 12: Is a technical amendment to insert a reference to new Division 5B of Part IIIA [see Clause 11 ] in section 304, which, broadly, stipulates that the capital gains tax rules constitute the primary taxation code for gains and losses on the disposal of assets by superannuation funds.
Clause 13: Is a technical amendment to insert a reference to new Division 5B of Part IIIA [see Clause 11 ] in the section 317 definition of "CGT roll-over provisions", relevant for the provisions dealing with the attribution of income of controlled foreign companies.
Clause 14 : Specifies that the above amendments apply to relevant disposals of assets that occur after 26 February 1992.
Dividend Streaming Amendments
[See pages 39-46 for further details]
Clause 15: Inserts three additional types of arrangement into the definition of 'dividend streaming arrangement' in section 160APA.
Clause 16: Amends section 160AQCB to ensure the provision operates as intended when an interposed entity is used in a dividend streaming arrangement.
Clause 17: Proposes that the amendments will apply to dividends paid on or after the date of commencement of the new provisions. The provisions commence on the date the Bill receives Royal Assent.
Amendments Relating to Accrued Leave Transfer Payments
[See pages 47-52 for further details]
Clause 18: Inserts in section 6 of the Income Tax Assessment Act a definition of the term 'accrued leave transfer payment'. It is defined as having the meaning given by section 6G.
Clause 19: Inserts after section 6F of the Act new section 6G which defines what is meant by 'accrued leave transfer payments' and also defines the meaning of the word 'employee' for the purposes of the definition of 'accrued leave transfer payments'.
Clause 20: Inserts new paragraph 26(ec) into the Act.
Clause 21: Omits subsection 51(3) from the Act and replaces it with a new subsection 51(3).
Clause 22: Provides that the amendments made by Division 5 of the Bill will apply as if they had been made by subsection 3(1) of the Income Tax Assessment Amendment Act (No. 3) 1978 .
Depreciation - Option to Specify Lower Rate
[See pages 58-60 for further details]
Clause 23: Inserts new subsections 55(8) & (8A) which replace the present option, whereby taxpayers may adopt lesser rates of depreciation each year for individual plant items [subsection 55(8)], with a once-only option to adopt, at the time an asset first becomes depreciable, a lesser rate of depreciation that is not less than the rate based on the asset's effective life.
Clause 24: Specifies that the new option arrangement is to apply in relation to a taxpayer's current and subsequent years of income.
Arrangements Relating to Property
[See pages 63-65 for further details]
Clauses 25 to 31: The following new sections will make it clear that section 51AD and Division 16D apply to property where the taxpayer's entitlement to deductions in relation to the property is not based on ownership:
- •
- Section 122U - Division 10A [Mining and Quarrying]
- •
- Section 123G - Division 10AAA [Mineral and Quarry Materials Transport]
- •
- Section 124AR - Division 10AA [Petroleum Mining]
- •
- Section 124JF - Division 10A [Access roads and buildings in timber operations]
- •
- Section 124ZEA - Division 10C [Short-Term Traveller Accommodation]
- •
- Section 124ZLA - Division 10D [ Income-Producing Buildings & Structural Improvements]
Clause 32 : Specifies that these amendments apply to arrangements entered into after 16 December 1992.
Petroleum Mining Rollover Relief
[See pages 60-62 for further details]
Clause 33: Amends section 124AMAA to ensure that pre-18 September 1974 expenditure in relation to petroleum mining activities is covered by existing petroleum mining rollover relief provisions.
Clause 34: Specifies that the amendment applies to disposals occurring after 19 December 1991, the date from which the existing rollover relief provisions apply.
Clause 35: Ensures that the amendment applies to elections that have been made in relation to disposals of relevant property within wholly-owned company groups that occurred after 6 December 1990 and before 20 December 1991.
Pay-As-You-Earn (PAYE) Provisions - Definition of 'Salary or Wages', Variations of Deductions
[See pages 67-74 for further details]
Clause 36: Includes in the definition of 'salary or wages' in subsection 221A(1):
- •
- training allowances paid to participants in the Landcare and Environment Action Program [subclause 36(1)] ; and
- •
- payments of remuneration or allowances to members of an eligible local government body [subclause 36(2)] .
Clause 37: Inserts a new section 221B to enable a local governing body to resolve that it be treated as an eligible local governing body for PAYE purposes.
Clause 38: Amends section 221D to:
- •
- increase the penalty, for employers not making the correct PAYE deductions under subsection 221D(2), from $500 to $1000; and
- •
- enable the Commissioner to issue a single variation to an employee with more than one employer.
Clause 39: Increases the penalty contained in subsection 221F(13) from $50 to $100 where an employer fails to register with the Commissioner as a group employer.
Depreciation - Broadbanding
[See pages 53-54 for further details]
Clause 40: Amends repealed section 55 to make it clear that rates of depreciation determined on an effective life basis that correspond with a broadbanded rate cannot be increased to the next highest broadbanded rate.
Amendments to the Depreciation Cost Price Limit Rules
[See pages 75-79 for further details]
Change in basis of annual indexation of limits
Clause 41: Inserts new subsections 57AF(2) to (9), in place of existing subsections (2) to (12), specifying that annually indexed limits are to apply in relation to financial years rather than years of income.
Clause 42: Makes some technical amendments to subsection 59(6) - which deals with the apportionment of consideration received for the sale, loss or destruction of motor vehicles to which the depreciation cost price limit rules have applied - to reflect the re-numbering of the provisions of section 57AF as the result of the amendments contained in Clause 41 .
Clause 43: Specifies that the amendment applies to relevant motor vehicles acquired under contracts entered into after 16 December 1992 or, if constructed by a taxpayer, where construction commenced after that date.
It also specifies the transition from the former publishing requirement in relation to years of income to the new publishing requirement in relation to financial years.
Exemption of certain motor cars from the depreciation cost price limit rules
Clause 44: Inserts new paragraph 57AF(15)(d) which exempts motor vehicles specially fitted out for transporting disabled persons seated in wheelchairs from the depreciation cost price limit rules.
Clause 45: Specifies that the exemption applies to vehicles acquired under a contract entered in to after16 December 1992, or if constructed by a taxpayer, where construction commenced after that date.
It also contains safeguarding measures to prevent taxpayers obtaining access to the exemption in relation to motor cars acquired, commenced to be constructed or ordered by associates, end-users or lessors on or before16 December 1992.
Capital Gains Tax - Concessional Taxing Provisions
[See pages 81-84 for further details]
Clause 46: Amends the capital gains provisions to ensure that they do not apply inappropriately to tax an amount, or part of an amount, which is concessionally taxed under another provision of the Act.
Clause 47: States the date of effect of the amendment.
Capital Gains Tax - Cancellation of Statutory Licences
[See pages 85-86 for further details]
Clause 48: Amends section 160ZD of the Act so that the deemed market value rules contained in that section do not apply on the cancellation of a statutory licence where no consideration is received.
Clause 49: Provides for the amendment to apply from 16 August 1989.
Transfer of Capital Losses
[See pages 87-88 for further details]
Clause 50: Proposes an amendment to subsection 160ZP(7A) which will require that the cost base of shares and loans held in a loss company is to be determined at the end of the year of income of the transferee company in which the agreement to transfer the capital loss was made.
Clause 51: Provides that the amendment will apply from 16 December 1992.
Capital Gains Tax Roll - over for the Transfer of Assets Between Group Companies
[See pages 89-97 for further details]
Clause 52: Makes amendments to section 160Z consequential on the amendments made by Clauses 53 and 54.
Clause 53 : Repeals paragraphs 160ZZO(1)(g) and 160ZZO(1)(h).
Clause 54: Inserts new section 160ZZOA which provides that an asset will be deemed to be disposed of and reacquired for its market value when a group company to which the asset was transferred ceases to be a member of the company group.
Clause 55: Contains consequential amendments to the record keeping requirements contained in section 160ZZU.
Clause 56: Provides that the amendments relating to group company asset roll-overs apply to disposals of assets after 16 December 1992.
Capital Gains Tax - Principal Residence Exemption
[See pages 99-100 for further details]
Clause 57: Proposes new subsection 160ZZQ(1AB) which will specify that a purchaser acquiring a dwelling under a contract will be taken to have owned the dwelling at the time, prior to the acquisition of legal ownership, when she or he is first entitled to occupy the dwelling either under the purchase contract, or under a collateral contract.
Clause 58: Provides that new subsection 160ZZQ(1AB) will apply to disposals of assets after 19 September 1985.
Clause 59 : Amendment of assessments.
Sales Tax Amendment (Transitional) Act 1992
[See page 101 for further details]
Clause 60: Defines Principal Act' as meaning the Sales Tax Amendment (Transitional) Act 1992 for the amendments proposed in Part 4 of the Bill.
Clause 61: Makes minor technical amendments to the Schedule to the Principal Act in relation to the Australian National Maritime Museum Act 1990 and the Crimes (Taxation Offences) Act 1980 .
Amendment of the Taxation Administration Act 1953
[See page 103 for further details]
Clause 62: Defines 'Principal Act' as meaning the Taxation Administration Act 1953 for the amendments proposed in Part 5of the Bill.
Subclause 63(a): Amends the definition of "head" in section 2 of the Principal Act by inserting the Chairman of the Queensland Criminal Justice Commission in new paragraph (dad) of the definition.
Subclause 63(b): Amends the definition of "law enforcement agency" in section 2 of the Principal Act by inserting the Queensland Criminal Justice Commission in new paragraph (dad) of the definition.
Depreciation - Crown Leases
[See pages 55-58 for the details]
Clauses 64 & 65: Amend the transitional rules for the plant depreciation Crown lease provisions [section 54AA] in relation to disposals of pre-27 February 1992 plant for which the prime cost method of calculating deductions has been used. The amendment will prevent balancing loss deductions being allowed for that portion of the cost of plant notionally depreciated before 27 February 1992 and require tax to be imposed on recoupments of previously allowed deductions.
The amendment is to apply in relation to disposals occurring after 26 February 1992.