Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. John Howard, M.P.)Main Features
The purpose of this Bill is to provide a clear rule as to the time at which employers are entitled to deductions in respect of their liabilities for employees' long service, annual and other leave entitlements.
In order to resolve doubts cast on this issue by a recent decision of a Supreme Court, the law will be amended to provide specifically that employers are entitled to deductions for the cost of their employees' long service leave, annual leave or other leave only in the year in which payment for the leave is made to the employees or, in the case of deceased employees, to their dependants or personal representatives.
These specific provisions are to apply in relation to assessments of tax on income of 1977-78 and subsequent years of income, except for any assessments made before 28 September 1978.
Appeals against the Supreme Court decision have been lodged by the taxpayer concerned and by the Commissioner of Taxation. If the decision is upheld by the final appellate Court, the amendment made by the Bill will not prevent 1977-78 assessments made before 28 September 1978 or any prior year assessments from being amended as a consequence where the rights of the taxpayer concerned are protected by an objection, a request for reference to a Board of Review or an appeal to a Court at the time when the appellate Court gives its decision.