House of Representatives

Explanatory Memorandum

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

Chapter 5 - Consequential amendments

Outline of chapter

5.1 This chapter explains amendments to various provisions of the ITAA 1997 and the ITAA 1936 as a consequence of the introduction of the First Child Tax Offset (Baby Bonus).

Detailed explanation of new law

Amendments to the ITAA 1997

Amends the list of tax offsets

5.2 Division 13 of the ITAA 1997 is amended to insert, in the list of tax offsets, a reference to the offset provided for a first child in new Subdivision 61-I. [Schedule 1, item 1]

Inserts the first child tax offset

5.3 Division 61 of the ITAA 1997 is amended to remove the note at the end of section 61-345 which advises that the Division has ended and inserts new Subdivision 61-I which introduces the first child tax offset provisions. [Schedule 1, item 2]

First child tax offset is a refundable tax offset

5.4 Division 67 of the ITAA 1997 which explains the refundable tax offset rules is amended to ensure that the first child tax offset is to be subject to the refundable tax offset rules. [Schedule 1, item 3]

Dictionary definitions

5.5 Division 995 of the ITAA 1997 which provides a dictionary of defined terms is amended to insert the following definitions:

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base year has the meaning given by new section 61-430 (see paragraphs 3.14, 3.19 and 3.23 to 3.26) [Schedule 1, item 4] ;

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child event has the meaning given by new section 61-360 (see paragraphs 2.12 and 2.16) [Schedule 1, item 5] ;

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legally responsible for a child means that a person is legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of a child (see paragraph 2.14) [Schedule 1, item 6] ; and

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primary entitlement to the first child tax offset has the meaning given bynew subsection 61-355(2) (see paragraphs 2.10 and 2.21) [Schedule 1, item 7] .

Amendments to the ITAA 1936

Ability to amend an assessment

5.6 Subsection 170(10AA) of the ITAA 1936 is amended to insert a reference to new Subdivision 61-I, being the Subdivision dealing with the tax offset for the first child, to ensure that an assessment can be amended in respect of the Baby Bonus. [Schedule 2, item 1]