House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. John Howard, M.P.)

General outline

The Bill will amend the income tax law to:

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revise the provisions that empower the Commissioner of Taxation to counter arrangements that reduce Australian tax through the shifting of profits out of Australia;

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introduce new zone allowance arrangements, as announced in the 1981-82 Budget Speech, details of which were announced on 15 November 1981, and which are to apply from 1 November 1981;

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remedy a defect that allows avoidance of tax on profits from short-term transactions in property by selling off shares in a company or an interest in a trust estate that holds the property, instead of selling the property itself (proposal announced on 10 September 1981);

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ensure that allowances received by Defence Force personnel serving overseas continue to receive parallel tax treatment to similar allowances received by civilians;

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give effect to the 1981-82 Budget proposal to grant accelerated rates of depreciation for plant and equipment used in the production of basic iron and steel products (details announced on 30 October 1981);

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

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made after 5 February 1982 to the R.S.P.C.A. (proposal announced on 5 February 1981); or

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made during the 1981-82 financial year to the Help Poland Live Appeal (proposal announced on 18 February 1981), the Australian Red Cross Poland Appeal and the World Vision of Australia Poland Emergency Appeal.

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prevent unintended benefits being secured in respect of gifts made under the taxation incentives for the arts scheme (proposal announced on 14 October 1981);

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formalise procedures for the appointment of valuers under the taxation incentives for the arts scheme;

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close possible loopholes in the measures introduced in 1980 for taxing the income of trust estates and of dependent children; and

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ensure that medical expenses are treated as rebatable amounts where payment is made to a company or other unqualified employer of a legally qualified practitioner who renders eligible medical services.