Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 3 - Increase in rebates for low income aged persons and certain pensioners
Overview
3.1 Schedule 3 to the Bill will amend the Income Tax Regulations to increase the maximum rebates available for low income aged persons and certain pensioners.
Summary of the amendments
3.2. The amendments will give effect to the Governments announcement in its tax reform policy document, Tax Reform: not a new tax, a new tax system : The Howard Governments Plan for a New Tax System , to increase these rebates.
3.3 Clause 2 of the Bill provides that this Act commences, or is taken to have commenced, after all of the GST-related Acts have received the Royal Assent. This reflects the integration of the measures that will give effect to the Governments plan for a new tax system.
3.4 The amendments in Schedule 3 giving effect to the proposed increases in the maximum rebates will apply to assessments for the 2000-2001 year of income and later years of income.
Background to the legislation
3.5 The Government, as part of its tax reform plan, announced its intention to provide for an increase in the pensioner and low income aged person rebates. The maximum rebates for low income aged persons and certain pensioners will be increased by $250 a year (for a single person) and $175 a year (for each of a couple).
Explanation of the amendments
3.6 The rebates for low income aged persons and certain pensioners are available under sections 160AAAA and 160AAA of the Income Tax Assessment Act 1936 . The amount of the rebate is not fixed but is calculated annually by reference to formulae in the Income Tax Regulations. The calculation of the rebate for certain pensioners is determined under Income Tax Regulation 151 and the rebate for low income aged persons is calculated under Income Tax Regulation 150AD.
3.7 Items 3 and 6 of Schedule 3 insert new subregulations that extend the definition of rebate amount (for low income aged persons) and taxpayers rebate amount (for certain pensioners) so that each of the rebates is increased by either $250 (for a single person) or $175 (for each of a couple). The new definitions will apply to assessments for the 2000-2001 year of income and later years of income.
3.8 Items 1, 2, 4, 5, and 7 of Schedule 3 make consequential amendments to related regulations.
3.9 Item 8 of Schedule 3 makes it clear that the amendment of the Income Tax Regulations by this Schedule does not prevent the future amendment or repeal, by regulations, of the regulations that have been amended by this Schedule.