House of Representatives

Explanatory Memorandum

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

General outline

The Taxation Laws Amendment Bill 1985 will amend the Income Tax Assessment Act:

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to abolish the rule (known as the "30/20 rule") which requires life assurance companies and two categories of superannuation funds to hold at least 30 per cent of their assets in public securities, including at least 20 per cent in Commonwealth securities, in order to be eligible for special tax concessions (proposal announced on 10 September 1984);

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to counter further tax avoidance schemes of the "expenditure recoupment" type;

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to phase in personal income tax on Christmas Island from the commencement of the 1985-86 income year and to introduce full company tax and Medicare levy from the same date (proposal announced on 10 April 1985);

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to permit the Commissioner of Taxation to make available to the Australian Statistician for statistical purposes certain information in respect of business taxpayers;

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to achieve consistency between the pay-as-you-earn (PAYE) and prescribed payments system (PPS) provisions by extending the objection and appeal rights available in relation to certain PPS penalties to corresponding penalties under the PAYE provisions;

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to correct a drafting error in the provisions extending eligibility to the dependent spouse rebate to de facto couples that has the unintended effect of denying a part year entitlement to a daughter-housekeeper rebate where the taxpayer contributes to the maintenance of a spouse (whether legal or de facto) during some other part of the year of income;

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to exclude payments of social security family income supplement from the separate net income of a dependant for concessional rebate purposes; and

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to make a number of formal amendments to reflect changes in the machinery of Government; to effect some minor drafting changes and to repeal redundant provisions relating to Commonwealth and State public servants appointed to taxation Boards of Review,

and the Taxation (Interest on Overpayments) Act:

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to provide for the payment of interest on certain PPS and PAYE penalties that are refunded as a result of a successful objection or appeal.