Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Clarification of the meaning of 'eligible employee'
Schedule 1 to this Bill amends the Income Tax Assessment Act 1936 by clarifying the definition of 'eligible employee' in section 82AAA.
This clarification is intended to put beyond doubt the fact that a taxpayer cannot be an employee of themselves. This will ensure that only contributions made for genuine eligible employees are deductible.
Date of effect: The amendments will apply to any superannuation contributions made after 4.00 pm, by legal time in the Australian Capital Territory, on 30 June 2000.
Proposal announced: This measure was announced in the Assistant Treasurer's Media Release No. 35 of 30 June 2000.
Financial impact: Negligible.
Compliance cost impact: Negligible.
Summary of regulation impact statement
Impact: Low.
Main points:
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- Business will benefit from slightly reduced ongoing compliance costs, by virtue of the greater simplicity and clarity.
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- The very limited number of taxpayers affected will incur small up-front costs familiarising themselves with the measures or having advisers familiarise themselves with the new law.
Removal of deductions for contributions to non-complying superannuation funds
Schedule 1 to this Bill amends the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 to deny deductions for employer contributions knowingly made to non-complying superannuation funds. Contributions will only be deductible if the contributions are made to a complying superannuation fund.
Non-complying funds have generally not been used for retirement income purposes but instead have been extensively used in tax schemes attempting to achieve a tax wipe-out.
Date of effect: The amendments will apply to any superannuation contributions made after 4.00 pm, by legal time in the Australian Capital Territory, on 30 June 2000.
Proposal announced: This measure was announced in the Assistant Treasurer's Media Release No. 35 of 30 June 2000.
Financial impact: Negligible.
Compliance cost impact: Negligible.
Summary of regulation impact statement
Impact: Low.
Main points:
- •
- Business will benefit from slightly reduced ongoing compliance costs, by virtue of the greater simplicity and clarity. Deductions will be available for contributions to the same category of superannuation funds that qualify for contributions under superannuation guarantee.
- •
- The very limited number of taxpayers affected will incur small up-front costs familiarising themselves with the measures or having advisers familiarise themselves with the new law.
Superannuation excluded from fringe benefits only when made for an employee
Schedule 1 to this Bill amends the Fringe Benefits Tax Assessment Act 1986 to ensure that the exclusion of payments to superannuation funds and retirement savings accounts from the term 'fringe benefit' applies only to payments made for the employee.
Superannuation contributions made by an employer for the benefit of an associate of the employee will be subject to fringe benefits tax.
Date of effect: Contributions made after introduction of this Bill.
Proposal announced: Not applicable.
Financial impact: Negligible.
Compliance cost impact: Negligible.
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