House of Representatives

Explanatory Memorandum

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

GENERAL OUTLINE

This Bill will amend:

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the Income Tax Assessment Act 1936:

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to modify the rules relating to the registration of tax agents by:

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permitting individual and partnership tax agents to register suitably qualified employees as nominees of the tax agent;

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enabling eligibility criteria for future registration as a tax agent or as a nominee of a registered tax agent to be prescribed;

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providing Tax Agents' Boards with a general power to suspend the registration of a tax agent;

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requiring that shares carrying at least 25 per cent of the voting power in a company tax agent be beneficially owned by a director or directors with the necessary qualifications to be registered as a tax agent;

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extending the rights of appeal that are available against decisions of the Tax Agents' Boards;

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increasing from $2 to $80 the fee payable on lodgment of an application for registration as a tax agent or as a nominee of a registered tax agent;

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introducing a re-registration fee of $40 plus $5 per nominee each 3 years;

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providing a mechanism that will enable the business of a partnership tax agent to be continued following a change in constitution of the partnership;

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reconstituting the Tax Agents' Boards; and

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remedying several technical deficiencies in the existing provisions;

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to restrict eligibility for the special accelerated depreciation concession for Australian trading ships, with effect from 22 December 1986, to new ships that satisfy existing eligibility criteria and in respect of which a grant is payable under the Ships (Capital Grants) Act 1987 (proposal announced on 2 April 1987);

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to extend the scope of income tax deductions allowable for cash bids paid for offshore petroleum exploration permits under the 'new' Commonwealth cash bidding system to include cash bids paid under Commonwealth 'old' cash bidding systems for the grant of offshore petroleum exploration permits and production licences as well as cash bids paid under any equivalent State and Northern Territory 'old' and 'new' cash bidding systems (proposal announced on 17 September 1986);

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to modify the practical application of the foreign tax credit system in certain respects and correct some unintended consequences and technical deficiencies;

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to effect minor changes to the thin capitalisation rules in Division 16F;

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to maintain the income tax exemption for allowances paid to disabled persons undertaking rehabilitation programs, authority for the payment of which has been transferred from the Social Security Act 1947 to the Disability Services Act 1986;

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to remove, from 1 January 1988, the exemption from income tax of payments received under the Aboriginal Secondary Assistance Scheme for students 16 years of age or over and under the Aboriginal Study Assistance Scheme;

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to extend the availability of the beneficiary rebates to recipients of Formal Training Allowance for the year of income that commenced on 1 July 1987 and subsequent years of income;

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to exclude family allowance supplement and child disability allowance from "separate net income" for dependant rebate purposes from 17 December 1987 and 15 November 1987 respectively;

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to remove, from the day this Bill receives the Royal Assent, the exemption from income tax of the carer's pension where the handicapped pensioner cared for is of age pension age and the non-relative carer is not;

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to omit paragraphs 23(x) and (y) of the Income Tax Assessment Act 1936 which are now redundant as a result of the income tax exemption conferred by regulations made under the International Organizations (Privileges and Immunities) Act 1963 following upon Australia's accession to the Convention on the Privileges and Immunities of the Specialized Agencies and Australia's acceptance of the Agreement on the Privileges and Immunities of the International Atomic Energy Agency;

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to alter references to provisions of the Social Security Act 1947 following the renumbering of that Act by the Social Security Amendment Act 1987;

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the Income Tax Rates Act 1986:

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to also alter a reference to a provision of the Social Security Act 1947 following the renumbering of that Act;

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the Fringe Benefits Tax Assessment Act 1986:

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to modify provisions relating to the preparation of fringe benefits tax returns by tax agents consistent with the amendments of the tax agent provisions of the Income Tax Assessment Act 1936;

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the Taxation Laws Amendment (Foreign Tax Credits) Act 1986:

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to correct technical deficiencies in the transitional provisions of the foreign tax credit system legislation;

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the Taxation Laws Amendment (Fringe Benefits and Substantiation) Act 1987:

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to effect a minor drafting correction; and

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the Sales Tax (Exemptions and Classifications) Act 1935:

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to remove sales tax exemption items relating to goods for use by certain international organisations which are now redundant due to:

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regulations made under the International Organizations (Privileges and Immunities) Act 1963; and

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the winding-up of one of the international organisations entitled to exemption.