House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Paul Keating. M.P.)

General Outline

This Bill will amend the income tax law to:

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allow a resident company to transfer the right to an allowable deduction for a loss incurred in the 1984-85 income year, or a subsequent income year, to another resident company, where there is 100 per cent common ownership;

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increase, with effect from 22 August 1984, the write-off rate in respect of short-term traveller accommodation buildings and non-residential income-producing buildings from 2 1/2 per cent to 4 per cent per annum;

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extend by one year the date by which eligible plant must be first used or installed to qualify for the investment allowance;

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allow, with effect from 22 August 1984, mineral exploration and prospecting expenditure to be deducted from income derived from any source instead of only from income derived from a mining business;

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increase the basic zone and "overseas forces" rebates by 25 per cent with effect from 1 November 1984;

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change, with effect from 1 July 1984, the boundaries of the special zone areas in line with 1981 census data where this will advantage taxpayers;

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extend, with effect from 1 July 1984, eligibility for the dependent spouse rebate to a taxpayer with a de facto spouse on the same basis as the rebate is presently available to a legally married taxpayer and, consequential on that:

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deny the housekeeper rebate for a de facto spouse;

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provide that a taxpayer with a de facto spouse is not entitled to a daughter-housekeeper rebate;

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ensure that a taxpayer cannot obtain more than one dependent spouse rebate; and

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extend entitlement to all concessional (including zone and "overseas forces") rebates of tax to recognise de facto spouses;

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introduce rebates of tax of $75 per annum for a married (including de facto married) taxpayer and $50 per annum for a single taxpayer, both rebates shading-out above specified income levels, for taxpayers wholly or mainly dependent on social security unemployment, sickness or special benefits;

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increase the income level at which the existing pensioner rebate begins to shade-out to reflect the effect of the proposed personal income tax rate scale that is to apply from 1 November 1984;

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provide the method of calculating provisional tax for the 1984-85 income year, and ensure that deductions for subscriptions to shares in licensed management and investment companies in one year are not taken into account in calculating provisional tax for the succeeding year;

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extend by two years, to 30 June 1986, the scheduled date of termination of the immediate deduction (under section 75C) for expenditure incurred on fencing to help eradicate bovine brucellosis and tuberculosis in live stock;

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grant income tax deductions for gifts of the value of $2 or more:

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made after 20 March 1984 to the Work Skill Australia Foundation Incorporated;

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made after 21 August 1984 to The Academy of the Social Sciences in Australia Incorporated;

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of property, listed in the Register of the National Estate, made after 21 August 1984 to National Trust bodies;

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of trading stock made after 21 August 1984 to an eligible fund, authority or institution where the value of the gift has been included (under sub-section 36(1)) in the taxpayer's assessable income;

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alter and clarify, in the provisions authorising special concessions for eligible Australian trading ships, the basis for determining the maximum complement of officers and crew members allowable for an eligible ship; and

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ensure neutral tax consequences of a substitution on or after 8 August 1984 of existing semi-government and local government securities by securities issued on a matched term basis by a State central borrowing authority (proposal as it applies to semi-government securities announced on 7 August 1984).