House of Representatives

Explanatory Memorandum

Circulated by authority of the Treasurer, the Hon Wayne Swan MP

General outline and financial impact

Shareholder and unitholder rights

Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to:

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ensure that no amount is included in the assessable income of a shareholder in a company or a unitholder in a unit trust as a result of acquiring certain rights issued by the company to acquire further shares or by the trustee of the unit trust to acquire further units; and

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ensure that an amount that is included in the assessable income of a shareholder as a result of acquiring rights issued by the company to dispose of shares, is appropriately reflected in the cost base of the rights.

Date of effect : These amendments apply to rights issued on or after 1 July 2001. The retrospective application of these amendments will not disadvantage taxpayers.

Proposal announced : This measure was announced in the Treasurer's Press Release No. 019 of 8 April 2008.

Financial impact : Nil.

Compliance cost impact : Negligible.

Restriction on GST refunds and time limits for recovery and refund of indirect tax

Schedule 2 to this Bill amends the Taxation Administration Act 1953 to correct a deficiency in the goods and services tax (GST) refund restriction provisions. This measure also addresses deficiencies in the four-year time limit on indirect tax and fuel tax credit related liabilities and entitlements to refunds related to indirect tax and fuel tax credits and ensures that they apply as intended.

Date of effect : The amendment to the GST refund restriction provisions applies to overpayments that relate to tax periods commencing on or after 1 July 2008. The amendment to the four-year time limit applies on and after 1 July 2008.

Proposal announced : This measure was announced in the Treasurer's Press Release No. 030 of 6 May 2008.

Financial impact : This measure will have an unquantified but expected to be small impact on GST, wine equalisation tax and luxury car tax revenue and fuel tax credit entitlements.

Compliance cost impact : Low impact. These amendments ensure that the provisions apply more consistently and do not impose any significant compliance cost impacts on affected businesses.

Income tax treatment of rent assistance paid to Austudy recipients

Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 to exempt rent assistance paid to Austudy recipients from income tax.

Date of effect : This measure applies to rent assistance paid to Austudy recipients in the 2007-08 income year and later income years.

Proposal announced : This measure has not previously been announced.

Financial impact : Nil.

Compliance cost impact : Nil.

Income tax treatment of the Carer Adjustment Payment

Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 to exempt the Carer Adjustment Payment from income tax.

Date of effect : This measure applies to Carer Adjustment Payments paid in the 2007-08 income year and later income years.

Proposal announced : This measure has not previously been announced.

Financial impact : Nil.

Compliance cost impact : Nil.