House of Representatives

Explanatory Memorandum

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

GENERAL OUTLINE

Taxation Laws Amendment Bill (No.4) 1986

This Bill will amend -

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the Income Tax Assessment Act 1936 -

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to overcome arrangements under which provisional tax is avoided by the manipulation of shares of partners and beneficiaries in closely held partnerships and trusts (1986-87 Budget announcement);

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to exclude from exemption income derived under the Commonwealth's single age-related educational assistance scheme (AUSTUDY) which, from January 1987, is to replace the Commonwealth's Tertiary Education Assistance Scheme (TEAS), the Adult Secondary Education Assistance Scheme (ASEAS) and the Secondary Allowances Scheme (SAS);

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to ensure that payments made after 7 April 1986 based on the value of natural resources produced and recovered in Australia are treated as income having a source in Australia (proposal announced on 7 April 1986);

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to specify the date by which amounts deducted from such payments to meet the tax due or which may become due by the non-resident are to be remitted to the Australian Taxation Office;

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to specify the date by which amounts similarly deducted from payments of royalties to non-residents are to be remitted to the Australian Taxation Office;

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to provide that the tax on capital gains will not apply to proceeds received by a company or trustee of a unit trust in respect of the grant of options to acquire shares or units or debentures of the company or unit trust until the year in which the options expire, and then only in respect of options which expire without being exercised (proposal announced on 22 July 1986);

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to advance the due dates for payment of instalments of company tax payable by companies that have with the leave of the Commissioner adopted, in lieu of the regular year of income ending on 30 June, an accounting period ending one month or more before that date (1986-87 Budget announcement); and

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to extend the income tax rebate available in respect of taxable amounts received under life assurance policies to amounts paid under policies issued by the State Insurance Office of Victoria, and to amend the rebate provisions to reflect the change of name of the State Government Insurance Office (Queensland) to Suncorp Insurance and Finance;

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the Australian Capital Territory Taxation (Administration) Act 1969 -

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to incorporate interpretative and machinery provisions for the assessment and refund of ACT stamp duty to be imposed, by the accompanying Australian Capital Territory Stamp Duty Amendment Bill 1986, on grants of leases of land by the Commonwealth and in respect of chattels conveyed with residential properties (1986-87 Budget announcement); and

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to provide for the assessment and collection of the new ACT tax on transfers of certain marketable securities being imposed by the accompanying Australian Capital Territory Tax (Transfers of Marketable Securities) Bill 1986 (proposal announced on 10 June 1986);

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the Bankruptcy Act 1966, the Crimes (Taxation Offences) Act 1980 and the Crown Debts (Priority) Act 1981 in consequence of the introduction of changes to the arrangements for the collection at source of tax that is due, or may become due, by non-residents in respect of payments of natural resource income or royalty;

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the Taxation (Interest on Overpayments) Act 1983 in consequence of the introduction of provisional tax anti-avoidance measures and changes to the arrangements for the collection, at source, of tax in respect of payments to non-residents of natural resource income and royalty;

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the Taxation Administration Act 1953 -

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to create a third statutory office of Second Commissioner of Taxation with powers and functions the same as those of the two existing Second Commissioners of Taxation;

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to provide for the payment of a $200 fee for reference of a decision on a taxation objection to the Administrative Appeals Tribunal or a court - the fee to be refunded if the reference is successful (1986-87 Budget announcement); and

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to remedy a drafting oversight in respect of the review procedures relating to decisions to refuse applications for tax clearance certificates; and

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the Estate Duty Assessment Act 1914 and the Pay-roll Tax Assessment Act 1941 to make minor drafting corrections.

Australian Capital Territory Stamp Duty Amendment Bill 1986

This Bill will amend the stamp duty law applicable in the Australian Capital Territory (including Jervis Bay) -

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to increase, for conveyances of real property interests, the marginal rate of duty on the value of the property, or on any consideration for the conveyance, that exceeds $100,000;

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to impose duty on grants of leases of land by the Commonwealth;

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to include, in the value for stamp duty purposes of conveyances of residential property, the value of chattels conveyed with the property; and

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to align the rate of duty on the non-rent component of consideration for leases of land with the rate of duty on the rent component.

Each of these measures was announced in the 1986-87 Budget.

Australian Capital Territory Tax (Transfers of Marketable Securities) Bill 1986

This Bill for a new Act will impose Australian Capital Territory tax on the registration, by a company incorporated in the ACT, of transfers of marketable securities listed on a register kept outside the ACT (proposal announced on 10 June 1986).

Sales Tax (Exemptions and Classifications) Amendment Bill (No. 2) 1986

This Bill will amend the Sales Tax (Exemptions and Classifications) Act 1935 -

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to remove the existing sales tax exemptions available in respect of -

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articles for the personal use of the Governor-General, the Governor of a State or a member of the family of the Governor-General or a State Governor; and

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articles for the personal or official use of a member of the staff of the Governor-General or a State Governor; and

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to make it clear that a specific taxing item or sub-item in a Schedule to the Act prevails over a general exemption item or sub-item.