Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. John Howard, M.P.)General Outline
This Bill will amend the income tax law to exempt from income tax the income that Australian Wool Testing Authority Limited derives in consequence of its taking over the functions of the existing Australian Wool Testing Authority.
Main features
The Income Tax Assessment Amendment Bill (No. 3) 1982 will (by clause 3) give effect to a decision, arising from the Review of Commonwealth Functions, to exempt from income tax income of a new company that is taking over, as from 1 July 1982, the activities of the Australian Wool Testing Authority. The income of that body is exempt from income tax under existing law (sub-section (1) of Section 87 of the Wool Industry Act 1972).
The new company is being incorporated in Victoria as the "Australian Wool Testing Authority Limited".
The Bill will exempt from income tax income of the new company derived on or after 1 July 1982 in relation to the function of carrying out the testing of wool and other fibres or of products made from wool and other fibres, these being the functions of the existing Authority.
Notes on Clauses
Clause 1: Short title etc.
By sub-clause (1) of this clause the amending Act is to be cited as the Income Tax Assessment Amendment Act (No. 3) 1982.
Sub-clause (2) will facilitate a reference to the Income Tax Assessment Act 1936 which, in the Bill, is referred to as the "Principal Act".
Clause 2: Commencement
Under this clause the amending Act is to come into operation on the day on which it receives the Royal Assent. But for this clause the amending Act would, by reason of sub-section 5(1A) of the Acts Interpretation Act 1901, come into operation on the twenty-eighth day after the date of Assent.
Clause 3: Exemptions
This clause will amend section 23 of the Principal Act, which exempts certain income from income tax.
The amendment proposed by this clause will exempt from income tax certain income of the company being formed to take over the functions of the Australian Wool Testing Authority, a body corporate which was established under the Wool Industry Act 1962 and is preserved and continued in existence under the Wool Industry Act 1972.
Proposed sub-clause (1) will insert in section 23 of the Principal Act a new paragraph, paragraph (jd) to exempt from income tax certain income of the new company, the Australian Wool Testing Authority Ltd. By sub-paragraph (i) the exemption will apply to income derived from the carrying out by the company of the testing of wool and other fibres, or products made from wool and other fibres, and to income arising from the issuing of certificates and the making of reports in respect of the tests.
Sub-paragraph (ii) will extend the exemption to income derived by the company from the investment of its wool testing and associated income or of funds to be used in or in connection with the testing operations.
The effect of sub-clause (1) will thus be to confer on the new company exemption from income tax equivalent to that currently applicable to activities of the present Authority.
By sub-clause (2) the exemption will apply to income derived by the company on or after 1 July 1982.