Senate

Revised Explanatory Memorandum

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

Chapter 5 - Income tax treatment of the Prime Minister's Prize for Australian History and the Prime Minister's Prize for Science

Outline of chapter

5.1 Schedule 5 to this Bill amends the Income Tax Assessment Act 1997 to exempt from income tax the Prime Minister's Prize for Australian History and the Prime Minister's Prize for Science, to the extent that the prizes would otherwise be assessable income.

Context of amendments

5.2 On 20 June 2007 the Prime Minister announced that the Prime Minister's Prize for Australian History would be tax exempt.

5.3 These amendments ensure that no tax is payable on the Prime Minister's Prize for Australian History and the Prime Minister's Prize for Science.

Summary of new law

5.4 From 1 July 2006, the Prime Minister's Prize for Australian History and the Prime Minister's Prize for Science will be exempt from income tax to the extent that the prizes would otherwise be assessable income.

Detailed explanation of new law

5.5 Whether a prize is taxable income depends on consideration of the circumstances and the nature of the prize and the recipient.

5.6 Given that the treatment of the prizes depends on the nature of the prize and the recipient, these amendments ensure that the Prime Minister's prizes are exempt only where the amounts would otherwise be assessable income. [Schedule 5, item 2, section 51-60]

Application provision

5.7 These amendments apply to assessments for the 2006-07 income year and later income years. [Schedule 5, item 3]