House of Representatives

Explanatory Memorandum

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

General outline

Income Tax Assessment Amendment Bill (No. 5) 1983

The Bill will amend the income tax law -

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to withdraw, with effect from 19 December 1981, investment allowances for otherwise eligible plant that is effectively controlled and used by an organisation or authority, income of which is exempt from income tax;

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to deny, with effect from 1 p m on 24 June 1982, deductions that would otherwise be allowable to an owner of property that is leased under a leverage leasing arrangement (or is used under a similar arrangement), where the property -

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is used overseas by non-residents;

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was previously owned by the current lessee or real end-user; or

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is leased or in real end-use in tax-exempt activities;

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to introduce special income tax concessions for eligible Australian ships commissioned on or after 29 July 1977, namely -

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to confer depreciation allowances in respect of eligible ships in equal instalments over 5 years;

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in certain circumstances, to allow the first year's depreciation in the year before an eligible ship is commissioned; and

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to extend the investment allowance to an eligible ship used outside Australia (proposal announced on 29 July 1982 and 30 March 1983);

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to include in a taxpayer's assessable income bonuses, and other amounts in the nature of bonuses, received in respect of a policy of life assurance within the first 4 years of a policy issued after 27 August 1982 and on or before the date of introduction of this Bill and similar amounts received within the first 10 years of a policy issued after the date of introduction of this Bill;

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associated with that, to allow a standard rate rebate of tax where a bonus or similar amount included in assessable income is in respect of a policy issued by a life assurance company, the investment income of which is subject to income tax;

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to modify, in a number of respects, the operation of the special income tax concessions for investments in the production of Australian films (proposals announced on 21 June, 23 August and 24 September 1983);

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to exempt from tax, with effect from 17 February 1983, the first 2 weeks' payments of special benefit under the Social Security Act 1947 to victims of major disasters such a bushfires and floods (proposal announced on 27 April 1983);

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to counter tax avoidance practices in connection with employer-sponsored employee superannuation funds, with effect from 1 July 1977, by -

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including in full in assessable income of the recipient benefits received or obtained on or after that date in breach of the fund rules or which are excessive in amount having regard to criteria specified in the law;

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including in assessable income consideration received or obtained for the transfer or assignment of rights to receive benefits from such funds (proposal announced on 14 November 1983);

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to extend, with effect from 23 November 1983, the present exemption from interest withholding tax for interest on public and widely-spread overseas issues of "bearer" debentures to all overseas public and widely-spread debenture issues, whether in bearer or registered form.