House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 5 - Information and communications technology, etc

Outline of chapter

5.1 Schedule 5 to this bill amends the ITAA 1997 to exempt from income tax the income of a society or association established for the purpose of promoting the development of Australian ICT resources.

5.2 Schedule 5 also amends the FBTAA 1986 to allow a rebate from FBT to an employer of a non-profit society or association established for the purpose of promoting the development of Australian ICT, aquaculture and fishing resources.

5.3 The amendments in relation to the exemption from income tax apply from 1 July 2000.

5.4 The amendments in relation to the FBT rebate for a non-profit society or association established for the purpose of promoting the development of ICT resources apply from 1 April 2000.

5.5 The amendments in relation to the FBT rebate for a non-profit society or association established for the purpose of promoting the development of aquaculture and fishing resources apply from 1 April 1999.

Summary of new law

5.6 The Government has announced that income derived by a non-profit society or association established to develop Australian ICT resources is to be exempt from income tax.

5.7 The Government also announced that an employer which is a non-profit society or association established to develop ICT resources would be eligible to claim a rebate from FBT.

5.8 The ITAA 1997 was amended in the year 2000 to exempt from income tax, for the 1999-2000 income year onwards, the income of non-profit societies and associations established to develop Australian aquaculture and fishing resources. There was no corresponding amendment under the provisions of the FBTAA 1986 in relation to granting a section 65J rebate from FBT. The FBTAA 1986 will now allow a rebate from FBT to these employers.

Detailed explanation of new law

Rebate of FBT

5.9 A section 65J rebate from FBT will be allowed to an employer which is a non-profit society or association established to develop Australian ICT resources. [Schedule 5, item 1, paragraph 65J(1)(ka)]

5.10 Employers which are non-profit societies or associations established to promote the development of Australian aquacultural and fishing resources are also to be allowed a section 65J rebate from FBT. [Schedule 5, item 2, paragraph 65J(1)(l)]

Exemption from income tax

5.11 An exemption from income tax will be allowed on the income derived by a non-profit society or association established to develop Australian ICT resources. [Schedule 5, item 4, section 50-40, item 8.3 in the table]

Application provisions

5.12 The amendments will apply as follows:

•

the rebate from FBT in relation to the development of Australian ICT resources applies from, and including, 1 April 2000;

•

the rebate from FBT in relation to the development of Australian aquacultural and fishing resources applies from, and including, 1 April 1999; and

•

the exemption from income tax on income derived in relation to the development of Australian ICT resources applies from, and including, 1 July 2000.