House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Wayne Swan MP)

Glossary

The following abbreviation is used throughout this explanatory memorandum.

General outline and financial impact

The following abbreviations and acronyms are used throughout this explanatory memorandum.

General outline and financial impact

Amounts misappropriated by an employee or agent

Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to allow taxpayers to:

•

claim a deduction in relation to an amount misappropriated by an employee or agent following the disposal of an asset that has been dealt with under the uniform capital allowance provisions;

•

recognise the misappropriation under the capital gains tax provisions; or

•

both claim a deduction and recognise the misappropriation as discussed above (depending on whether the use of the asset was for taxable purposes or not).

Date of effect: These amendments commence on the date this Bill receives Royal Assent and apply to amounts misappropriated in the 2007-08 and later years of income.

Proposal announced: This measure was announced on 8 May 2007 in the 2007-08 Budget.

Financial impact: Unquantifiable, but is expected to be negligible.

Compliance cost impact: Minimal to nil.

Extending the superannuation guarantee late payment offset

Schedule 2 to this Bill amends the Superannuation Guarantee (Administration) Act 1992 to extend the period within which an employer can make a contribution - after the due date - and still be eligible to use the late payment offset to reduce their superannuation guarantee (SG) charge liability. This measure will reduce the incidence of employers having to potentially pay the same amount twice, once when they make a late contribution to the employee's fund and again when they are assessed with an SG charge for making the contribution late.

Date of effect: These amendments apply from the date of Royal Assent.

Proposal announced: This measure was announced in the then Minister for Revenue and Assistant Treasurer's Press Release No. 121 of 2 October 2007.

Financial impact: Minimal.

Compliance cost impact: Low. These amendments affect employers who make a late contribution. There will be a low increase in implementation compliance costs arising from the need for some employers to be aware of these changes. There will be a low ongoing compliance cost impact arising from the need for some employers to make an election before being able to use the late payment offset. It is anticipated that the measure will affect a small proportion of the average 15,000 employers per quarter who incur liability for the SG charge.

Capital gains tax market value substitution rule for interests in certain companies and trusts

Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 so that the market value substitution rule in section 116-30 does not apply when capital gains tax (CGT) event C2 occurs in relation to interests in certain companies and trusts.

Date of effect: These amendments apply to CGT events happening during and after the 2006-07 income year.

Proposal announced: This measure was announced by the then Minister for Revenue and Assistant Treasurer in Press Release No. 128 of 16 October 2007.

Financial impact: Unquantifiable but insignificant.

Compliance cost impact: This measure is expected to have a small impact on implementation compliance costs and result in nil ongoing compliance costs.

Income tax exemption of the Endeavour Executive Award and research fellowships under the Endeavour Awards

Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 to ensure that the Endeavour Executive Award and research fellowships under the Endeavour Awards scholarship program are exempt from income tax.

Date of effect: This measure applies to fellowships and awards received in the 2007-08 income year and later income years.

Proposal announced: This measure was announced in the 2007-08 Mid-Year Economic and Fiscal Outlook (MYEFO) report.

Financial impact: This measure will have these revenue implications:

Compliance cost impact: Minimal.

Early completion bonuses for apprentices

Schedule 5 to this Bill amends the Income Tax Assessment Act 1997 to extend an income tax exemption to early completion bonuses paid to apprentices by State and Territory governments.

Date of effect: This measure applies to early completion bonuses received in the 2007-08 and later income years.

Proposal announced: This measure was announced on 23 October 2007 in the Pre-Election Economic and Fiscal Outlook.

Financial impact: This measure will have these revenue implications:

Compliance cost impact: Negligible.

Deductible gift recipients

Schedule 6 to this Bill amends the Income Tax Assessment Act 1997 to update the list of deductible gift recipients (DGRs) to include nine new DGRs and extend the time period of four existing DGRs.

Date of effect: There are various dates of effect based upon each of the individual organisation's DGR start date. The nine new DGRs are listed below:

•

AE 2 Commemorative Foundation Ltd - 29 February 2008;

•

Ian Thorpe's Fountain for youth Limited - 29 February 2008;

•

Wheelchairs for Kids Incorporated - 29 February 2008;

•

Amy Gillett Foundation - 14 September 2007;

•

The Spirit of Australia Foundation - 11 September 2007;

•

World Youth Day 2008 Trust - 5 September 2007;

•

Memorials Development Committee Ltd - 5 September 2007;

•

The Council for Jewish Community Security - 10 August 2007; and

•

Playgroup Australia Incorporated - 3 August 2006.

In addition this Schedule extends the DGR listing of the:

•

Dunn and Lewis Youth Development Foundation Limited - 1 January 2008;

•

Finding Sydney Foundation - 28 August 2007;

•

Xanana Vocational Education Trust - 21 July 2007; and

•

Australia for UNHCR - 28 June 2007.

Proposal announced: The deductibility of gifts to the following organisations were announced by the former Minister for Revenue and Assistant Treasurer:

•

AE 2 Commemorative Foundation Ltd - Press Release No. 131 of 17 October 2007;

•

Ian Thorpe's Fountain for youth Limited - Press Release No. 126 of 16 October 2007;

•

Wheelchairs for Kids Incorporated - Press Release No. 126 of 16 October 2007;

•

Amy Gillett Foundation - Press Release No. 116 of 14 September 2007;

•

The Spirit of Australia Foundation - Press Release No. 113 of 11 September 2007;

•

World Youth Day 2008 Trust - Press Release No. 110 of 11 September 2007;

•

Memorials Development Committee Ltd - Press Release No. 108 of 10 September 2007; and

•

The Council for Jewish Community Security - Press Release No. 098 of 10 August 2007.

The deductibility of gifts to Playgroup Australia Incorporated was announced in the then Minister for Revenue and Assistant Treasurer's Press Release No. C059/04 of 25 June 2004.

In addition the former Minister for Revenue and Assistant Treasurer announced the extension of the following DGR listings:

•

Dunn and Lewis Youth Development Foundation Limited - Press Release No. 129 of 17 October 2007;

•

Finding Sydney Foundation - Press Release No. 126 of 16 October 2007;

•

Xanana Vocational Education Trust - Press Release No. 112 of 11 September 2007; and

•

Australia for UNHCR - Press Release No. 102 of 17 August 2007.

Financial impact: This measure will have these revenue implications:

Compliance cost impact: Nil.

Chapter 1 - Amounts misappropriated by an employee or agent

Outline of chapter

1.1 Schedule 1 to this Bill amends the Income Tax Assessment Act1997 (ITAA 1997) to:

•

allow a deduction in relation to amounts misappropriated by an employee or agent in respect of a disposal of a depreciating asset under the uniform capital allowances (UCA) regime;

•

recognise the amount misappropriated by an employee or agent if a capital gains tax (CGT) event occurs and the amount would have otherwise been taken into account in working out the amount of a capital gain or capital loss; or

•

allow a taxpayer to both claim a deduction and recognise the misappropriation as discussed above (in situations where the use of the asset was in part for a taxable purpose and in part for other than a taxable purpose).

Context of amendments

1.2 When a depreciating asset is disposed of, the amount of the proceeds received, or taken to be received, by a taxpayer is included as the termination value in a balancing adjustment calculation under the UCA provisions (Division 40 of the ITAA 1997). When a CGT event occurs to a CGT asset, the amount of the proceeds received, or taken to be received, by a taxpayer is taken into account in working out the amount of a capital gain or capital loss under the CGT provisions. In the case where the asset is used for a partial taxable purpose or other than a taxable purpose then both the UCA and CGT provisions will apply.

1.3 However, under section 25-45 of the ITAA 1997, if the amount (or non-cash benefit) is misappropriated by an employee or agent, it can only be deducted against assessable income to the extent that the amount (or non-cash benefit) was included in the assessable income of the taxpayer.

1.4 The current law does not recognise amounts (or non-cash benefits) that are misappropriated by an employee or agent following the disposal of an asset because the amount is not included in the assessable income of the taxpayer. Rather, the amount is used to calculate the balancing adjustment under the UCA provisions, or a capital gain or loss from a CGT event under the CGT provisions, or a mixture of both.

1.5 There is currently no provision in the tax law that recognises the reality that the taxpayer did not receive the economic benefit from the disposal as a result of the misappropriation.

Uniform capital allowances

1.6 In general, section 40-285 of the ITAA 1997 provides a balancing adjustment calculation as the difference between an asset's termination value and its adjustable value before the balancing adjustment event. Under sections 40-300 and 40-305, the termination value includes amounts or non-cash benefits that the taxpayer either receives, or is entitled to receive, according to the relevant subsection 40-300(2) or 40-305(1).

1.7 Section 25-45 does not give a deduction for amounts (or non-cash benefits) misappropriated by an employee or agent that are included in a balancing adjustment calculation as part of the termination value under the UCA provisions.

1.8 If an employee or agent misappropriates an amount (or a non-cash benefit) following the disposal of an asset that has been accounted for by a balancing adjustment calculation, the misappropriated amount is not included in the assessable income. Since section 25-45 only provides for a deduction for the amount included in the assessable income, it cannot provide a deduction under these circumstances.

1.9 Since amounts (or non-cash benefits) that are misappropriated by an employee or agent must be included in working out the tax consequences of a balancing adjustment event, it is appropriate that provision is also made to recognise the loss when the misappropriation has occurred.

Capital gains tax

1.10 A taxpayer is taken to have received any capital proceeds that their employee or agent has received. Therefore, the modification in subsection 116-45(1) of the ITAA 1997 for non-receipt does not apply to reduce the capital proceeds by the amount that is misappropriated by an employee or agent of the taxpayer.

1.11 Where there has been a misappropriation of the capital proceeds by an employee or agent of the taxpayer, in calculating a capital gain or loss, the taxpayer will:

•

have to include all the capital proceeds that they were entitled to receive, regardless of whether or not they actually received all of the proceeds; and

•

disregard any later recovery of the capital proceeds for CGT purposes.

1.12 These amendments ensure that the capital proceeds from a CGT event will be reduced if an amount is misappropriated by an employee or agent of the taxpayer. If an amount is later recovered, the original capital gain or loss will be amended to take this receipt into account.

1.13 These amendments also ensure that the termination value of a depreciating asset will be reduced by the amount misappropriated or increased by the amount of the misappropriation that is recouped if CGT event K7 happens to a depreciating asset. This ensures that the correct amount is taxed.

Summary of new law

1.14 This Schedule amends the ITAA 1997 to recognise amounts (or non-cash benefits) that are misappropriated by an employee or agent following the disposal of an asset that has been accounted for by either a balancing adjustment calculation as part of the termination value under the UCA provisions, or a CGT event under the CGT provisions, or both.

Uniform capital allowances

1.15 This Schedule amends Division 25 by inserting a provision to allow a deduction for amounts (or non-cash benefits) misappropriated by an employee or agent that are included in the termination value of a depreciating asset under sections 40-300 and 40-305. [Schedule 1, item 3, section 25-47 of the ITAA 1997]

1.16 The amount (or non-cash benefit) will be recognised as a deduction at the time that the misappropriation has occurred. The amount that can be deducted will be reduced in the same way (or by the same proportion) as occurs under section 40-290 for depreciating asset balancing adjustment amounts (ie, a reduction for other than taxable purpose use). [Schedule 1, item 3, subsection 25-47(4) of the ITAA 1997]

Capital gains tax

1.17 This Schedule also amends Division 116 by inserting a provision which reduces the capital proceeds from a CGT event by the amount misappropriated by an employee or agent. [Schedule 1, item 18, section 116-60 of the ITAA 1997]

1.18 CGT event K7 happens where a balancing adjustment event happens to a depreciating asset that has been used, or installed ready for use, wholly or partly for non-taxable (generally for private) purposes.

1.19 If CGT event K7 happens to a depreciating asset, the termination value of the depreciating asset is reduced by the misappropriated amount or increased by the amount of the misappropriation that is recouped. [Schedule 1, item 7, subsections 104-240(3) and (4) and item 8, subsections 104-245(3) and (4) of the ITAA 1997]

Comparison of key features of new law and current law

Detailed explanation of new law

Uniform capital allowances

1.20 These amendments allow a deduction for amounts (or non-cash benefits) misappropriated by an employee or agent that are included in the termination value of a depreciating asset under sections 40-300 and 40-305.

1.21 The amount that can be deducted is so much of the amount misappropriated that represents an amount applicable to the taxpayer under item 8 in the table in subsection 40-300(2) or item 1, 3, 4 or 6 of the table in paragraph 40-305(1)(b) in relation to the balancing adjustment event. In particular, these amendments refer precisely to all or part of the amount (or non-cash benefit) that is capable of being misappropriated by an employee or agent. [Schedule 1, item 3, subsection 25-47(2) of the ITAA 1997]

1.22 For example, item 8 in the table in subsection 40-300(2) provides that for a balancing adjustment event in relation to a depreciating asset that is lost or destroyed, the termination value is the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction. Similar rules are contained in the table in paragraph 40-305(1)(b).

1.23 These amendments also reduce the deduction for amounts (or non-cash benefits) misappropriated by an employee or agent in the same way (or by the same proportion) as occurs under section 40-290 for depreciating asset balancing adjustment amounts (ie, a reduction for other than taxable purpose use). [Schedule 1, item 3, subsection 25-47(4) of the ITAA 1997]

Example 1.1

Linda operates a flower delivery business. She purchased a van she used solely in her business. Linda's agent sold the van on her behalf for $10,000 and misappropriated the proceeds. At that time, in the 2008 year, the adjustable value of the van was $6,000. Under the UCA provisions, Linda would include $4,000 in assessable income (ie, the difference between the van's termination value and its adjustable value before the balancing adjustment event). Under these amendments, Linda is now also able to claim a deduction equal to the amount that was misappropriated - $10,000 (see item 3, section 25-47 of the ITAA 1997).

Example 1.2

Henry is an architect and operates a business from home. He owns a computer which is used 60 per cent in the business. Henry authorises an agent to sell the computer on his behalf and collect the proceeds. The agent sells the computer for $1,500 (its termination value). At that time, in the 2008 year, the adjustable value of the computer is $1,000. The balancing adjustment calculation will use an adjustable value of $1,000 and a termination value of $1,500. Since Henry is taken to receive the amount, $300 (60% of $500) will be included in Henry's assessable income.

In the same year, Henry becomes aware that his agent has misappropriated the sale proceeds. Under the new provisions, Henry can claim a deduction of $900 (60% of $1,500) for the 2008 income year (see item 3, subsection 25-47 of the ITAA 1997).

Example 1.3

Alternatively, following the facts of Example 1.2, if Henry's agent sells the computer for $600, the termination value will be $600, and $240 (60% of $400) will be deductible from Henry's assessable income (as the termination value is less than the adjustable value). If the sale proceeds are misappropriated by his agent, $360 (60% of $600) may be deducted from Henry's assessable income in the year the misappropriation happened.

If a tax return has already been lodged for the 2008 income year and the misappropriation was discovered in a later year of income, then the taxpayer can request an amendment by the Australian Taxation Office (see item 3, subsections 25-47(3) to (5) of the ITAA 1997).

1.24 The items in the tables in subsection 40-300(2) or paragraph 40-305(1)(b) that are excluded from the new section in Division 25 in relation to the balancing adjustment, refer to amounts that are not strictly capable of being misappropriated.

1.25 If a misappropriation is discovered in a later year of income, the taxpayer may request the Commissioner of Taxation to amend their earlier return. An assessment can be amended within four years, starting immediately after the taxpayer discovers the misappropriation. [Schedule 1, item 3, subsection 25-47(5) of the ITAA 1997]

1.26 Any subsequent recoupment of the misappropriated amount for a depreciated asset will be required to be included in the taxpayer's assessable income in the income year when it is recouped. [Schedule 1, item 2, subsection 20-30(1) of the ITAA 1997]

Example 1.4

Abbie was able to deduct $500 from her assessable income due to misappropriation of funds by her agent. If she is able to subsequently recoup the amount at a later date, this must be included in Abbie's assessable income for the income year in which it was recouped.

Capital gains tax

Misappropriation rule: modification rule

1.27 Division 116 specifies the capital proceeds to be taken into account in working out whether a capital gain or loss has been made.

1.28 Capital proceeds from a CGT event are ordinarily:

•

money a taxpayer receives, or is entitled to receive, for the event happening;

•

the market value of any property a taxpayer receives, or is entitled to receive, for the event happening; or

•

a combination of these.

1.29 Section 116-60 will modify Division 116 to ensure that the capital proceeds from a CGT event are reduced by the amount misappropriated by an employee or agent (whether by theft, embezzlement, larceny or otherwise). [Schedule 1, item 18, subsections 116-60(1) and (2) of the ITAA 1997]

1.30 This rule exists because the general rules treat the taxpayer as having received an amount to which they are entitled to receive even though they did not actually receive the amount. [Schedule 1, item 18, subsection 116-60(1) of the ITAA 1997]

Example 1.5

Parvin sold a rental property in the 2007 income year for $500,000. She would include $500,000 as the capital proceeds for the purposes of working out the capital gain in her 2007 tax return.

However, if the purchaser paid $500,000 to Parvin's solicitor and the solicitor misappropriates the amount, under the current law she must still include the full $500,000 as capital proceeds even though those proceeds were not passed on to her by the solicitor.

Under these amendments, the $500,000 would not be included as capital proceeds for the purposes of working out the capital gain.

1.31 However, if the taxpayer later receives an amount as recoupment of all or part of the misappropriated amount, the capital proceeds will be increased by the amount received. [Schedule 1, item 18, subsection 116-60(3) of the ITAA 1997]

1.32 Parts 3-1 and 3-3 of the ITAA 1997 will apply to the debt owed to the taxpayer (misappropriated amount) as if it were not a CGT asset. [Schedule 1, item 18, subsection 116-60(4) of the ITAA 1997]

Termination value of the depreciating asset and CGT event K7: general case

1.33 A capital gain or loss may arise from a depreciating asset if CGT event K7 happens to the asset. That event can only happen if a balancing adjustment event has happened to the depreciating asset that has been used either wholly or partly for non-taxable (generally for private) purposes.

1.34 To ensure complementary treatment between the UCA rules and the CGT rules, a capital gain or loss under CGT event K7 is calculated on the basis of the depreciating asset's cost and termination value, instead of on the usual CGT basis of cost base and capital proceeds. The gain or loss arises at the same time as any balancing adjustment amount.

1.35 If the use was wholly for taxable purposes, CGT event K7 does not apply, but there will be a balancing adjustment under the UCA system.

1.36 If the use was not wholly for taxable purposes, there will be a capital gain or loss under CGT event K7 based on the difference between the depreciating asset's termination value and its cost. In such a case, there will be no balancing adjustment.

1.37 If there is mixed use (eg, partly taxable and partly non-taxable), there may be both a balancing adjustment and a capital gain or loss. That capital gain or loss will be based on the difference between the termination value and the cost, apportioned to reflect the taxable component of the decline in value.

1.38 Section 104-240 is used to work out the capital gain or loss for CGT event K7 in general cases. A taxpayer makes a capital gain from CGT event K7 if the termination value of the depreciating asset exceeds its cost. The capital gain is worked out from the formula in subsection 104-240(1).

1.39 Conversely a taxpayer makes a capital loss from CGT event K7 if the cost of the depreciating asset exceeds its termination value. The capital loss is worked out from the formula in subsection 104-240(2).

1.40 The amendments to section 104-240 ensure that if CGT event K7 happens to a depreciating asset, the termination value of the asset will be reduced by the amount misappropriated by the employee or agent and conversely, the termination value of the depreciating asset is increased by any amount received as recoupment of the amount misappropriated.

Example 1.6

Following from the facts in Examples 1.2 and 1.3, given that Henry bought the computer for $1,200 in the 2007 income year and sold the computer at a termination value of $1,500 in the 2008 income year, he makes a capital gain of $120 in relation to his 40 per cent private use under CGT event K7 (($1,500 - $1,200) × 40%).

If his agent subsequently misappropriates the sale proceeds, the termination value would be reduced to zero and a capital loss of $480 now arises under CGT event K7 (($0 - $1,200) × 40%) in the 2008 income year.

Should Henry recoup 100 per cent of the misappropriated amount in a later income year, under these amendments the termination value of the computer is increased by the recovered misappropriated amount of $600 ($1,500 × 40%) applicable to his private use.

In the later year of income Henry's tax assessment for the 2008 income year (of a $480 capital loss) will need to be amended to give effect to a $120 capital gain (see item 7, subsections 104-240(3) and (4) of the ITAA 1997).

Termination value of the depreciating asset and CGT event K7: pooled assets

1.41 When a balancing adjustment event happens in relation to a depreciating asset in a low-value pool, the taxable use portion of the depreciating asset's termination value is taken into account in working out the pool's closing balance for the income year.

1.42 Section 104-245 deals with the calculation of a capital gain or loss from a balancing adjustment event occurring for a depreciating asset that was allocated to a low-value pool under Subdivision 40-E.

1.43 A taxpayer makes a capital gain from CGT event K7 if the termination value of the pooled asset exceeds its cost. The capital gain is worked out from the formula in subsection 104-245(1).

1.44 Conversely, a taxpayer makes a capital loss from CGT event K7 if the cost of the depreciating asset exceeds its termination value. The capital loss is worked out from the formula in subsection 104-245(2).

1.45 The amendments to section 104-245 ensure that if CGT event K7 happens to a pooled depreciating asset, the termination value of the depreciating asset will be reduced by the amount misappropriated by the employee or agent and conversely, the termination value of the depreciating asset is increased by any amount received as recoupment of the amount misappropriated. [Schedule 1, item 8, subsections 104-245(3) and (4) of the ITAA 1997]

Amendment of assessments

1.46 If the taxpayer discovers the misappropriation or receives an amount as recoupment after lodging their income tax return for the income year the taxpayer may request the Commissioner of Taxation to amend their earlier return. An assessment can be amended within four years, starting immediately after the taxpayer discovers the misappropriation or receives the amount as recoupment. [Schedule 1, items 7, 8 and 18, subsections 104-240(5 ), 104-245(5) and 116-60(5) of the ITAA 1997]

Application and transitional provisions

1.47 These amendments commence when this Bill receives Royal Assent.

1.48 These amendments apply to amounts misappropriated in the 2007-08 and later income years. [Schedule 1, item 19]

Consequential amendments

1.49 There are tables, notes, subsections and references that are inserted, or changed because of the application of the new misappropriation provisions. [Schedule 1, items 1, 2, 4 to 6 and 9 to 17 of the ITAA 1997]

Chapter 2 - Extending the superannuation guarantee late payment offset

Outline of chapter

2.1 Schedule 2 to this Bill amends the Superannuation Guarantee (Administration) Act 1992 (SGAA) to extend the late payment offset that allows employers to use a late contribution to offset part of their superannuation guarantee (SG) charge liability.

Context of amendments

2.2 The SGAA prescribes a minimum level of superannuation support that all employers are required to provide for their eligible employees, either by making contributions to a complying superannuation fund or paying the SG charge. The prescribed minimum level of support is 9 per cent of the employee's ordinary time earnings. In order to avoid the SG charge, employers have been required to make contributions on behalf of their employees at least quarterly since 1 July 2003.

2.3 Superannuation contributions reduce an employer's SG charge liability if they are made by the due date (which is 28 days after the end of the quarter). An employer who fails to pay the required amount of contributions by the due date is liable to pay the SG charge to the Australian Taxation Office (ATO). The SG charge includes the contribution shortfall amount, a nominal interest component and an administration charge.

2.4 From 1 January 2006, an employer who makes a late contribution to an employee's superannuation fund within one month after the due date can use that late payment to offset against part of their SG charge for the employee for the quarter. However, if an employer makes a contribution more than one month after the due date they are unable to use the offset. This effectively means the employer must pay the same amount twice for a quarter for the same employee; once when they made the late contribution to the fund and again when they are required to pay the SG charge to the ATO.

Example 2.1

Debbie was required to make a $1,000 contribution for the March 2006 quarter commencing on 1 January 2006 on behalf of her employee, Catherine. Debbie has failed to make the contribution by the due date of 28 April 2006 but makes a late contribution of $1,000 into Catherine's superannuation fund on 5 June 2006. Debbie is assessed on 1 July 2006 with an SG charge liability for the March 2006 quarter in respect of Catherine. The SG charge includes the shortfall amount equal to the contribution which has in fact now been paid. Before these changes, the late payment offset could not be used by Debbie since her contribution was not made by 28 May 2006.

2.5 Amending the SGAA to extend the late payment offset for employers who make a contribution after the due date, will reduce the incidence of employers being forced to pay the same amount twice for a quarter for the same employee.

Summary of new law

2.6 Schedule 2 to this Bill amends the SGAA to extend the period within which an employer can make a superannuation contribution after the due date and still be eligible to use the late payment offset.

2.7 The amended late payment offset is available to employers who:

•

have made a contribution for an employee after the due date for the quarter;

•

have an outstanding SG charge for the employee for that quarter; and

•

elect, in the approved form, to use the offset.

2.8 These amendments ensure that employers who fail to make sufficient contributions by the due date, but subsequently made a contribution directly to the employee's fund, do not have to pay the same amount twice (once to the fund and once to the ATO). This is achieved as the amended late payment offset allows employers to use a late contribution to offset part of their SG charge for the employee.

Comparison of key features of new law and current law

Detailed explanation of new law

Eligibility to use the offset

2.9 The amended late payment offset is available to an employer who:

•

has made a contribution after the due date for the quarter for an employee [Schedule 2, item 1, paragraph 23A(1)(a)] ;

•

has an unpaid SG charge for that quarter for the employee; and

•

elects, in the approved form, that the contribution be offset against that SG charge.

2.10 The contribution can only be offset against an SG charge which relates to the same quarter and to the same employee.

2.11 Transitional provisions will allow an employer to use the offset if they have an SG charge for a year (rather than a quarter) which becomes payable after the commencement of this Schedule. [Schedule 2, item 8]

2.12 Transitional provisions will also enable an employer to use the offset if they have an SG charge liability for a year (rather than a quarter) which becomes payable after the commencement of this Schedule. [Schedule 2, item 9]

Election for the offset

2.13 An election to use a contribution as an offset must be in the approved form. The election can be made either in the first SG statement for the quarter or, if the employer has already been assessed for the quarter, within four years from when the SG charge for that quarter became payable. [Schedule 2, item 2, subsection 23A(2)]

2.14 Subsection 23A(2) enables an election to be communicated to the ATO and for the contribution to be used as an offset. Subsection 36(3) and section 46 of the SGAA set out when an SG charge becomes payable.

2.15 An employer cannot elect to use the offset before a contribution is made, and an election can only be made if the contribution is made after the due date. [Schedule 2, item 1, paragraph 23A(1)(a)]

2.16 If the election is made after the SG charge for the quarter has been assessed, the assessment must be amended before the employer's liability can be reduced. [Schedule 2, item 3, subsection 23(4A)]

2.17 Section 37 of the SGAA empowers the Commissioner of Taxation (Commissioner) to amend an assessment, including an amendment to reduce an employer's SG charge liability as a result of applying the offset under section 23A of the SGAA.

2.18 An election to use a contribution as an offset cannot be revoked. [Schedule 2, item 2, subsection 23A(2)]

Applying the offset

2.19 When an election in the approved form is lodged with the Commissioner in accordance with section 23A of the SGAA, the late contribution is applied to offset against the SG charge for the relevant quarter for the relevant employee.

2.20 The contribution is first used to offset against the nominal interest component of the SG charge for the quarter for the employee, before any remainder of the contribution is used to offset against the employer's SG shortfall for that quarter for that employee. This is in accordance with subsection 23A(4) of the SGAA.

Interest and penalties

2.21 Significant incentives remain to ensure employers make their SG payments on time. The interest and administration components of the SG charge are still required to be paid by the employer and penalties can be imposed by the ATO for late payments. As well, due to sections 26-95 and 290-95 of the Income Tax Assessment Act 1997, the SG charge and the late payment offset are not tax deductible to the employer.

2.22 An employer who fails to pay the SG charge when it becomes payable is liable to pay the general interest charge. Subsection 8AAC(3) of the Tax Administration Act 1953 and section 49 of the SGAA set out how the general interest charge is calculated for the purposes of the SG charge.

2.23 When an election is made for the first time under section 23A of the SGAA, the general interest charge accrues on the original SG shortfall amount from the day the relevant SG charge became payable to when an election in the approved form is lodged with the Commissioner. [Schedule 2, items 4 to 7]

2.24 From the day the election in the approved form is lodged with the Commissioner, the general interest charge will accrue on any remainder of the original SG shortfall amount (after the offset has been applied). [Schedule 2, item 7, subsection 49(3A)]

2.25 If more than one election is made under section 23A of the SGAA with respect to the same SG charge, the general interest charge accrues on the remainder of the original SG shortfall amount after the offset has been applied, and accrues from the time the approved form is lodged with the Commissioner to when the next election is lodged. [Schedule 2, item 7, subsection 49(3A)]

2.26 The general interest charge continues to accrue until the time when both the SG charge and the general interest charge are fully paid, in accordance with subsection 49(3) of the SGAA.

Example 2.2

Following on from Example 2.1, once the law is enacted Debbie decides to use the $1,000 late contribution she made into Catherine's fund on 5 June 2006, to offset her SG charge for the March 2006 quarter with respect to Catherine. The SG charge includes a shortfall amount of $1,000 and a nominal interest component of $100. Debbie lodges a late payment offset form with the ATO on 7 August 2008.

The $1,000 contribution is used to offset Debbie's SG charge for the March 2006 quarter with respect to Catherine. The contribution is first used to pay the nominal interest component before any remainder is used to pay the SG shortfall amount. The general interest charge accrues on the original SG shortfall amount ($1,000) from 1 July 2008 (when the SG charge became payable) to 7 August 2008 (when the election is lodged). After the election, Debbie's remaining SG shortfall amount is $100.

Assume that in September 2008 Debbie makes a $50 contribution into Catherine's fund and on 18 October 2008 she lodges a late payment offset form to elect to use that contribution as an offset to her SG charge for the March 2006 quarter. The general interest charge accrues on the remaining SG shortfall amount ($100) from 7 August 2008 (when the first election was lodged) to 18 October 2008 (when the second election is lodged). After the election, Debbie's remaining SG shortfall amount is $50.

Assume that on 3 December 2008 Debbie decides to fully pay her SG charge and general interest charge for the March 2006 quarter with respect to Catherine. The general interest charge accrues on the remaining SG shortfall amount ($50) from 18 October 2008 (when the second election was made) to 3 December 2008 (when the SG charge and general interest charge are both fully paid).

Application and transitional provisions

Application provision

2.27 These amendments apply from the date of Royal Assent.

Transitional provisions

2.28 These amendments contain transitional provisions that apply to:

•

employers who have an SG charge for a year that becomes payable after the commencement of this Schedule [Schedule 2, item 9]; and/or

•

employers who have an unpaid SG charge at the commencement of this Schedule [Schedule 2, item 8].

Transitional provisions for employers with a superannuation guarantee charge for a year that becomes payable after the commencement date

2.29 Since 1 July 2003, employers have been required to make SG contributions every quarter, and those who fail to do so incur the SG charge for the quarter. Prior to this, employers were required to make SG contributions every year, and those who failed to do so incurred liability for the SG charge for the year.

2.30 Under the transitional provisions, the offset is available to an employer who has an SG charge for a year that becomes payable after the commencement of this Schedule. [Schedule 2, item 9]

2.31 Under the transitional provisions, for the purposes of applying the offset and calculating liability for the SG charge (including any additional SG charge), the SGAA applies to the employer so that references to 'quarter' are replaced with 'year'. [Schedule 2, item 9]

Transitional provisions for employers with an unpaid superannuation guarantee charge at the commencement date - election to use the offset

2.32 Employers who are eligible to use the offset must make the election either in the first SG statement or within four years from when the SG charge for the quarter became payable. [Schedule 2, item 2, subsection 23A(2)]

2.33 Under the transitional provisions, where an employer has been assessed with the SG charge prior to the date of commencement of this Schedule and the charge remains unpaid at that date, then an election to use the offset for the remaining SG charge must be made within four years from the date of commencement. [Schedule 2, subitem 8(2)]

2.34 These transitional provisions apply to employers who have an unpaid SG charge for a quarter and to employers who have an unpaid SG charge for a year, at the commencement of this Schedule. [Schedule 2, subitem 8(4)]

2.35 After the commencement of this Schedule, if the employer incurs a new SG shortfall, then the employer is required to make the election either in the first SG statement for the new shortfall or within four years from when the new SG charge becomes payable. This is in accordance with subsection 23A(2) of the SGAA.

Transitional provisions for employers with an unpaid superannuation guarantee charge at the commencement date - amending assessments

2.36 Section 37 of the SGAA empowers the Commissioner to amend an assessment. Subsection 37(5) of the SGAA allows the Commissioner to amend an assessment if an employer applies to have their assessment amended within four years from when the SG charge under that assessment became payable.

2.37 Under the transitional provisions, an employer who elects to use the offset under section 23A of the SGAA must apply to have the relevant assessment amended within four years from the commencement of this Schedule, before the Commissioner may amend that assessment. [Schedule 2, item 8, paragraph (3)(b)]

2.38 According to subsection 37(3) of the SGAA, an amendment to reduce the liability of an employer under an assessment is not effective unless the amendment is made within four years from the day the assessment was made.

2.39 Under the transitional provisions, an amendment to reduce the employer's SG charge liability (as a result of an offset under section 23A of the SGAA) is not effective unless the amendment is made within four years from the commencement of this Schedule. [Schedule 2, item 8, paragraph (3)(a)]

2.40 These transitional provisions apply to employers who have an unpaid SG charge for a quarter and to employers who have an unpaid SG charge for a year, at the commencement of this Schedule. [Schedule 2, subitem 8(4)]

2.41 After the commencement of this Schedule, if an employer incurs a new SG shortfall (whether in respect to the same or to a different employee) and they elect to use the offset for the shortfall, then the employer is required to apply to amend the relevant assessment within four years from the day the new SG charge becomes payable. Further, the employer's liability is not reduced unless the amendment is made within four years from the day the assessment was made. This is in accordance with subsections 37(3) and (5) of the SGAA.

Consequential amendments

2.42 These amendments contain consequential amendments to sections 37 and 49 of the SGAA and, for the purposes of the transitional provisions, to other parts of the SGAA which relate to an SG charge for a quarter. These amendments do not contain consequential amendments to other Acts.

Chapter 3 - Capital gains tax market value substitution rule for interests in certain companies and trusts

Outline of chapter

3.1 Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to ensure that the market value substitution rule does not apply where capital gains tax (CGT) event C2 occurs in relation to a share in a widely held company or a unit in a widely held unit trust. The terms widely held company and widely held unit trust are based on the principles in the CGT scrip for scrip roll-over provisions.

Context of amendments

3.2 Division 116 of the ITAA 1997 deals with general rules for capital proceeds from a CGT event. One of the modifications to the general rules is the market value substitution rule in section 116-30. This rule applies where a CGT event occurs and:

•

there are no capital proceeds; or

•

there are capital proceeds but either those proceeds cannot be valued or the proceeds are more or less than the market value and:

-

the parties were not dealing with each other at arm's length in connection with the event; or

-

the CGT event is CGT event C2 (about cancellation, surrender and similar endings).

3.3 The market value substitution rule is designed to prevent taxpayers from reducing capital gains or increasing capital losses by manipulating the capital proceeds associated with a CGT event. This would generally occur where parties are not dealing with each other at arm's length.

3.4 In relation to other CGT events, provided that the parties are dealing with each other at arm's length, the market value substitution rule in section 116-30 will not apply, even if the capital proceeds are more or less than the market value.

3.5 There is currently no equivalent 'arm's length dealing test' in relation to CGT event C2. In other words, the market value substitution rule will automatically apply in relation to a C2 event where the capital proceeds are more or less than the market value, regardless of whether the parties are dealing with each other at arm's length. This can result in a taxpayer being subject to CGT on an unrealised gain or being denied some or all of a capital loss even though all parties are dealing with each other at arm's length and there is no tax manipulation present.

3.6 These amendments will ensure that the market value substitution rule does not apply where CGT event C2 occurs in relation to a share in a widely held company or a unit in a widely held unit trust, as it is assumed that in these cases the parties are dealing with each other at arm's length.

3.7 These amendments will facilitate arrangements where widely held companies or unit trusts, as part of their ongoing capital management strategy, cancel shares or units and agree with their shareholders or unit holders on a cancellation price in advance of the cancellation taking place. Setting a cancellation price in advance provides certainty for management and shareholders or unit holders on the cost or return from the capital reduction.

Summary of new law

3.8 This Schedule amends the ITAA 1997 by inserting subsection 116-30(2B) and section 116-35. These provisions will ensure that the market value substitution rule in subsection 116-30(2) does not apply where CGT event C2 occurs in relation to interests in companies and unit trusts that have at least 300 members or unit holders and that do not have concentrated ownership.

Comparison of key features of new law and current law

Detailed explanation of new law

3.9 The market value substitution rule in subsection 116-30(2) will no longer apply where CGT event C2 occurs in relation to a share in a company that has at least 300 members or a unit in a unit trust that has at least 300 unit holders, provided that neither the company nor the trust:

•

has concentrated ownership; or

•

satisfies subsection 116-35(5) about the possible variation of rights.

[Schedule 3, items 1 and 2, subsections 116-30(2B) and 116-35(1) to (5)]

3.10 It is assumed that a company or unit trust that has at least 300 members or unit holders and that does not have concentrated ownership will be dealing at arm's length with its members.

Concentrated ownership

3.11 A company will have concentrated ownership if an individual owns, or up to 20 individuals own between them, directly or indirectly (through one or more interposed entities) and for their own benefit, shares in the company carrying:

•

fixed entitlements to at least 75 per cent of the company's income or at least 75 per cent of the company's capital; or

•

at least 75 per cent of the voting power in the company.

3.12 A unit trust will have concentrated ownership if an individual owns, or up to 20 individuals own between them, directly or indirectly (through one or more interposed entities) and for their own benefit, units in the trust:

•

carrying fixed entitlements to at least 75 per cent of the trust's income or at least 75 per cent of the trust's capital; or

•

carrying at least 75 per cent of the voting power of the trust, if unit holders of the trust have a right to vote in respect of the activities of the trust.

[Schedule 3, item 2, subsections 116-35(3) and (4)]

Possible variation of rights

3.13 Where the constituent documents of a company or unit trust allow the rights attaching to the interests in that entity to be varied or abrogated in such a way as to create a concentration of ownership, the company or trust will be deemed to have a concentration of ownership. This is the case even if the rights are not actually varied or abrogated. [Schedule 3, item 2, subsection 116-35(5)]

3.14 Where this rule (as described in paragraph 3.13) applies the market value substitution rule will operate as normal.

Example 3.1

Sue owns 100 shares in Company A, a company listed on the Australian Securities Exchange (ie, it has more than 300 members). Company A decides to cancel some of its shares as part of its ongoing capital management strategy. The shareholders agree to a cancellation price of $2 per share on 1 July 2008 (the average closing price of Company A's shares on the securities exchange for the previous quarter). The shares are cancelled on 30 October 2008, at which time the share price had increased to $2.50. Sue receives $200 for her shares on the same day (100 × $2).

The time of CGT event C2 is either when Sue enters into the contract that results in the asset ending or, if there is no contract, when the asset ends. In this case, as there is no contract, the timing of CGT event C2 is when the share is cancelled (30 October 2008).

Prior to these amendments, the market value substitution rule in section 116-30 would have resulted in Sue having to substitute the market value of the shares ($2.50) for the actual proceeds received ($2) when calculating her capital gain on the cancellation of her shares. This is because the CGT event is a C2 event and the capital proceeds were less than the market value of the asset at the time of the event. This resulted in Sue being subject to CGT on an unrealised gain, despite the fact that she was dealing with the company at arm's length.

Assume that Company A does not have concentrated ownership and its constituent documents do not allow for the rights of the shares to be varied or abrogated to allow concentrated ownership.

As a result of these amendments, Sue will calculate her capital gain or loss based on her actual proceeds, not the market value of the shares. This aligns with the general principle of CGT that taxpayers should only be subject to CGT on realised gains or allowed to deduct realised losses.

individual

3.15 For the purposes of determining whether a company or trust has a concentrated ownership under subsections 116-35(3) and (4), the following are taken to be single individuals:

•

an individual;

•

the individual's associates; or

•

nominees of either the individuals or of the individual's associates.

[Schedule 3, item 2, subsection 116-35(6)]

Application and transitional provisions

3.16 These amendments will commence on Royal Assent.

3.17 These amendments will apply to CGT events that happen in the 2006-07 income year and later income years. [Schedule 3, item 3]

Chapter 4 - Income tax exemption of the Endeavour Executive Award and research fellowships under the Endeavour Awards

Outline of chapter

4.1 Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to exempt from income tax research fellowships under the Endeavour Awards. This Schedule also amends the ITAA 1997 to exempt from income tax the Endeavour Executive Award.

Context of amendments

4.2 The Endeavour Awards scholarship program (the program) is an internationally competitive, merit-based scholarship program administered by the Department of Education, Employment and Workplace Relations. This program brings leading researchers, executives and students to Australia to undertake study, research and professional development in a broad range of disciplines and enables Australians to do the same abroad.

4.3 The Endeavour Executive Award and research fellowships under the program are awarded to postgraduate students, postdoctoral fellows, and high achievers in business, industry, education or government in Australia and participating countries. The duration of the research fellowships and the Executive Award is generally between one and six months.

4.4 Some scholarships offered under the program to recipients undertaking full-time study are currently exempt from income tax. The Endeavour Executive Award and some research fellowships under the program do not require recipients to be in full-time education and as such are not exempt from tax. These amendments ensure consistent tax treatment of all fellowships and awards offered under the program regardless of whether the awards are made for full or part-time educational pursuits.

Summary of new law

4.5 These amendments provide that, from 1 July 2007, no income tax will be paid by recipients on an Endeavour Executive Award or a research fellowship under the program. These amendments ensure consistent tax treatment of all fellowships and awards offered under the program regardless of whether the awards are made for full or part-time educational pursuits.

Comparison of key features of new law and current law

Detailed explanation of new law

4.6 The Endeavour Awards program is an internationally competitive, merit-based scholarship program administered by the Department of Education, Employment and Workplace Relations.

4.7 Some scholarships offered under the program to undertake full-time study are currently exempt from income tax under item 2.1A in the table in section 51-10 of the ITAA 1997 and are therefore not covered by this exemption.

4.8 Under the current law, the tax treatment of the Endeavour Executive Award and some research fellowships under the Endeavour Awards scholarship program is inconsistent with other awards offered under this program, which are exempt from income tax for full-time students. Some parts of an Endeavour Executive Award and research fellowships under the Endeavour Awards are currently treated as assessable income where the recipient is not a full-time student.

4.9 This measure exempts the Endeavour Executive Award and all research fellowships under the Endeavour Awards from income tax. [Schedule 4, item 4, section 51-10]

4.10 Research fellowships currently include the:

•

Endeavour Research Fellowship;

•

Endeavour Research Fellowship for Indigenous Australians; and

•

Endeavour Australia Cheung Kong Research Fellowship.

The exemption also applies to any future research fellowships that are introduced under the Endeavour Awards scholarship program.

4.11 These amendments allow consistent income tax treatment for all recipients of an Endeavour Executive Award and research fellowships under the Endeavour Awards whether or not the recipients are full-time students.

Application and transitional provisions

4.12 These amendments apply to fellowships and awards received in 2007-08 and later income years. [Schedule 4, item 5]

Consequential amendments

4.13 Consequential amendments are made to the non-operative index that lists which income is exempt when derived by certain taxpayers. [Schedule 4, items 1 to 3, section 11-15]

Chapter 5 - Early completion bonuses for apprentices

Outline of chapter

5.1 Schedule 5 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to exempt from income tax the first $1,000 of an early completion bonus paid to an apprentice by a State or Territory government.

Context of amendments

5.2 Early completion bonuses are payments made to apprentices who complete their apprenticeship more quickly than normal. Currently, only the Queensland Government pays an early completion bonus to apprentices.

5.3 The Queensland Government offers an early completion bonus of $1,000 to apprentices in skill-shortage occupations listed on an Eligible Skill Shortage Occupation List. The bonus is designed to increase the supply of skilled tradespersons.

5.4 To be eligible for the bonus under the Queensland scheme, full-time apprentices must complete their apprenticeship at least six months prior to their original nominal completion date and part-time apprentices must complete their apprenticeship at least 12 months prior to their original nominal completion date.

5.5 It is a general principle of income tax law that remuneration or rewards for personal services, whether received in the capacity of employee or otherwise, are ordinary income. This would usually include payments in the nature of an early completion bonus.

Summary of new law

5.6 This measure provides an income tax exemption for the first $1,000 of an early completion bonus received by an apprentice, in an occupation of a kind to be specified in Australian Government regulations if the apprenticeship is finished within a time frame specified in the regulations for apprenticeships of that kind.

Comparison of key features of new law and current law

Detailed explanation of new law

5.7 These amendments introduce an income tax exemption for the first $1,000 of an early completion bonus paid by a State or Territory government to an apprentice in a listed occupation.

5.8 The first $1,000 of a bonus paid for early completion of certain apprenticeships will be exempt from income tax. [Schedule 5, item 2, section 51-10]

5.9 The bonus must be provided under a scheme provided by a State or Territory, and the scheme must be specified in an Australian Government regulation for the purpose of this subsection. [Schedule 5, item 3, subsection 51-42(1)]

5.10 The apprenticeship must also be for an occupation of a kind specified in the regulations. This ensures that the bonus is only exempt if paid to apprentices in occupations with skill shortages. [Schedule 5, item 3, paragraph 51-42(2)(a)]

5.11 The apprenticeship must be completed within a time frame specified in the regulations for apprenticeships of that kind. This ensures that the bonus is only exempt if the apprenticeship is completed in a period of time that is shorter than normal. [Schedule 5, subitem 3(2 ), paragraph 51-42(2)(b)]

5.12 It is intended that regulations to list the Queensland early completion bonus to apprentices be made as soon as this Bill receives Royal Assent.

Application and transitional provisions

5.13 These amendments apply to assessments for the 2007-08 income year and later income years.

Consequential amendments

5.14 Early completion bonuses for apprentices are added to the non-operative list of ordinary or statutory income which is exempt if derived by certain entities. [Schedule 5, item 1, section 11-15]

Chapter 6 - Deductible gift recipients

Outline of chapter

6.1 Schedule 6 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to update the list of deductible gift recipients (DGRs) to include nine new entities and to extend the time period of DGR status of four entities.

Context of amendments

6.2 The income tax law allows taxpayers who make gifts of $2 or more to DGRs to claim income tax deductions. To be a DGR, an organisation must fall within one of the general categories set out in Division 30 of the ITAA 1997, or be listed by name under that Division.

6.3 DGR status assists eligible funds and organisations to attract public support for their activities.

Summary of new law

6.4 These amendments add nine organisations to the list of specifically listed DGRs and extend the time period for which deductions are allowed for gifts made to four organisations. Gifts of $2 or more, made to these entities within each entity's eligible time period, are tax deductible.

Detailed explanation of new law

New listings

6.5 Schedule 6 allows deductions for gifts to the organisations listed in Table 6.1. [Schedule 6, items 1, 2, 4, 5 and 8 to 10]

6.6 The AE 2 Commemorative Foundation Ltd aims to ensure that the Australian World War I submarine HMAS AE 2, currently lying in the sea of Marmara, Turkey, is preserved and its role in the Gallipoli campaign is appropriately recognised. [Schedule 6, item 4]

6.7 Ian Thorpe's Fountain for youth Limited focuses on a range of activities such as:

•

improving the health and education outcomes of children, especially Indigenous children;

•

improving literacy as a step towards improving the health and life expectancy of children;

•

supporting Indigenous cultural education; and

•

supporting projects that help to establish or sustain viable business projects for Indigenous communities.

[Schedule 6, item 2]

6.8 Wheelchairs for Kids Incorporated manufactures and distributes wheelchairs to disabled children in many developing countries. [Schedule 6, item 8]

6.9 The Amy Gillett Foundation aims to raise awareness of cyclist safety through the use of media. This Foundation's efforts to raise awareness involve a range of communication strategies, conducting education, and funding research. [Schedule 6, item 9]

6.10 The Spirit of Australia Foundation is an educational organisation that encourages and facilitates research into, and the dissemination of, knowledge of Australian history and heritage. [Schedule 6, item 1]

6.11 The World Youth Day 2008 Trust is an international event targeted at Roman Catholic youth. World Youth Day 2008 will be held in Sydney between 15 and 20 July 2008, and is hosted by the Sydney Catholic Archdiocese. [Schedule 6, item 8]

6.12 The Memorials Development Committee Ltd is an organisation established to develop, design and construct two separate, but complementary memorials to World War I and World War II in the Anzac Parade memorials precinct of the Australian Capital Territory. [Schedule 6, item 4]

6.13 The Council for Jewish Community Security was established to assist in the provision of security and protection for members and institutions of the Australian Jewish community. [Schedule 6, item 10]

6.14 Playgroup Australia Incorporated is an organisation which works in conjunction with the eight state and territory peak playgroup bodies to promote playgroup participation for all families with young children. It advocates learning through play and supporting parents through playgroups as an integral part of the early childhood experience. [Schedule 6, item 5]

Extended listings

6.15 Schedule 6 extends the period for which deductions are allowed for gifts to the organisations listed in Table 6.2. [Schedule 6, items 3, 6, 7 and 11]

6.16 The Dunn and Lewis Youth Development Foundation was established to assist with the building of a memorial complex dedicated to two victims of the Bali bombing. The complex will provide programs to address chronic issues affecting young people. [Schedule 6, item 11]

6.17 The Finding Sydney Foundation is an organisation formed to find the cruiser HMAS Sydney and the German raider HSK Kormoran, which were sunk off the Western Australian coast in 1941. The Finding Sydney Foundation aims to ensure preservation of the war graves and to commemorate the memory with a virtual memorial. [Schedule 6, item 3]

6.18 The Xanana Vocational Education Trust aims to create a self-sustaining vocational education system in Timor-Leste. It has initially focused on making distributions to institutions in Timor-Leste such as the Dili Institute of Technology. [Schedule 6, item 7]

6.19 Australia for UNHCR (United Nations High Commissioner for Refugees) was established to raise funds in Australia for the UNHCR, and raise awareness locally about the plight of refugees. [Schedule 6, item 6]

Application and transitional provisions

6.20 These amendments to list the organisations in Tables 6.1 and 6.2 apply from the dates of effect shown in those tables. [Schedule 6, items 1 to 11]

Consequential amendments

6.21 A number of changes have been made to update the index to include the new entities. [Schedule 6, items 12 to 20]

Index

Schedule 1: Amounts misappropriated by an employee or agent

Schedule 2: Late payment offset for superannuation guarantee contributions

Schedule 3: CGT market value substitution rule for interests in widely held entities

Schedule 4: Endeavour Research Fellowships and Executive Awards

Schedule 5: Early completion bonuses for apprentices

Schedule 6: Deductible gift recipients