House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Finance, the Hon J.S. Dawkins, MP)

General Outline

The Income Tax Assessment Amendment Bill 1983 will amend the income tax law:

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to introduce from 1 September 1983 a system of tax deductions at source and of information reporting in respect of certain payments for contract work, and to make associated changes in PAYE tax deduction rules;

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to introduce, with effect from 20 July 1982, a new system of depreciation allowances under which plant is generally to be depreciable on a prime cost basis over either 5 years or 3 years, including a write-off over 3 years of certain plant and structures used in primary production;

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to introduce, with effect from 20 July 1982, a new basis of deduction for capital expenditure incurred in developing a mining property or oil field, under which deductions will generally be available on a straight line basis over ten years;

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to modify, with effect from 13 January 1983, the operation of the special income tax concessions for investment in the production of Australian films so that the special 150 per cent deduction may be taken in the year the qualifying investment is made, subject to the film being completed and the copyright interest being used for income producing purposes within 2 years after the end of the financial year in which investments in the film were first made;

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to introduce a scheme of depreciation allowances in respect of the construction cost of non-residential income-producing buildings, the construction of which commenced on or after 20 July 1982;

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to facilitate the collection of tax payable by non-resident beneficiaries of trust estates;

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to specifically provide in the law that interest paid by the Commissioner of Taxation under the proposed Taxation (Interest on Overpayments) Act 1983 will be assessable income of the recipient in the income year in which it is paid;

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to correct a technical deficiency in the motor vehicle cost price depreciation limit consequential on a change made in the basis of calculation of the motor vehicle purchase sub-group of the Consumer Price Index, on which annual changes in the limit are based.

The Income Tax (Payments for Work) (Consequential Amendments) Bill 1983 will make amendments to the Bankruptcy Act 1966 and the Crown Debts (Priority) Act 1981 to provide the Commissioner of Taxation the same priority in relation to the recovery of tax under the new source deduction system as he has in respect of outstanding PAYE instalments.

The remaining Bills will amend the income tax rates Acts to provide for the declaration and imposition of tax payable by a trustee of a trust estate who is in future to be taxed on behalf of a non-resident beneficiary.