House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, The Hon P.J. Keating, MP)

General Outline

Income Tax Assessment Amendment Bill (No. 4) 1983

This Bill will amend the income tax law to :

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facilitate the operation of the prescribed payments system by significantly reducing the paperwork burdens for many payers and payees and making it easier for persons affected to comply with the system's requirements (proposal announced on 5 October 1983 in response to the Report of the Senate Standing Committee on Finance and Government Operations);

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exempt from income tax the open employment incentive bonus payable to persons who, immediately following 6 months sheltered employment, complete 12 months full-time paid open employment on or after 1 October 1983 (Budget announcement);

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exempt from income tax only 50 per cent of the pay and allowances of part-time members of the Reserve Defence Forces in respect of service on or after 1 December 1983 and before 1 December 1984 and terminate the exemption thereafter (Budget announcement);

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ensure that remote area allowances to be paid to certain social security and repatriation pensioners and social security beneficiaries from 1 May 1984 are exempt from tax and provide that the income tax zone rebate otherwise allowable to such pensioners and beneficiaries be reduced by the amount of such allowances (Budget proposal);

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provide that from 1 March 1984 the additional benefit paid to unemployment, sickness and special beneficiaries caring for children and the supplementary allowance paid to sickness beneficiaries to assist with rent costs, both of which are paid under the Social Security Act 1947, will no longer be subject to tax (Budget proposal);

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ensure that the spouse carer's pension to be introduced from 1 December 1983, payable to a man providing care and attention for his severely handicapped pensioner wife, is taxed on a similar basis to that which applies to a pension paid to a woman by reason that she is the wife of a pensioner (Budget proposal);

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abolish, as from 1 July 1983, the rebate on up to $1,000 of dividend income of individual taxpayers (proposal announced in May Economic Statement);

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terminate, with effect from 23 August 1983, the deduction in respect of certain capital expenditure (predominantly the clearing of land) incurred in bringing land into use for primary production purposes (Budget announcement);

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terminate, with effect for losses incurred in 1983-84 or later income years, the deduction allowable in respect of a loss incurred in carrying on a business (i.e. gold mining) the income from which is exempt from tax (announced in May Economic Statement);

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terminate, with effect from 23 August 1983, the deduction available in respect of the cost of insulating a taxpayer's first home (Budget announcement);

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modify, with effect in relation to the 1983-84 income year and later years, the tax averaging system so that averaging will apply in all years instead of only in years for which a primary producer derives a tax reduction from averaging (announced in May Economic Statement);

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restore the position relating to rebates of tax in respect of dependants resident overseas that had existed before it was disturbed by the Domicile Act 1982, which came into operation on 1 July 1982 (proposal announced on 20 June 1983);

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increase the expenditure threshold from $1,590 to $2,000 for the purpose of the tax rebate on concessional expenditure (announced in May Economic Statement);

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exclude from liability to provisional tax trustees who, following legislative changes in the Autumn Sittings, are assessed in respect of income distributed to non-resident beneficiaries;

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make a technical change to the definition of "friendly society dispensary" as a consequence of amendments to the National Health Act; and

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provide the method of calculating provisional tax for the 1983-84 income year.

Income Tax (Rates) Amendment Bill (No.2) 1983

This Bill will amend the Income Tax (Rates) Act 1982:

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to reduce from $1,040 to $416 the income threshold at which special rates of tax apply to certain types of income derived by some unmarried minors; and

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as part of the changes to primary producer averaging arrangements, to bring about an upwards adjustment to the rates scales to reflect the application of tax rates based on average income in years in which the average income of a primary producer is greater than taxable income.

Income Tax (Individuals) Bill 1983

This Bill will:

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formally impose tax payable for the 1983-84 financial year by individuals, and by trustees generally, at the rates declared by the Income Tax (Rates) Act 1982, as proposed to be amended by the Income (Rates) Amendment Bill (No. 2) 1983; and

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formally impose provisional tax for the 1983-84 year of income.

Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Bill 1983

This Bill will declare and impose the rates of tax payable for 1983-84 by companies, trustees of corporate unit trusts, trustees of superannuation funds and trustees in respect of trust income of a non-resident company beneficiary of trust estates.

Income Tax (Bearer Debentures) Amendment Bill 1983

This Bill will amend the Income Tax (Bearer Debentures) Act 1971 to increase from 55 per cent to 60 per cent the basic rate of tax payable under section 126 of the Assessment Act on interest paid by a company on bearer debentures where the names and addresses of the holders of the debentures are not furnished by the company to the Commissioner of Taxation.