House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP

General outline and financial impact

Deductible gift recipients

Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to update the list of deductible gift recipients (DGRs) to make two entities DGRs, and change the name of another entity.

Date of effect : For the Charlie Perkins Trust for Children & Students, and the Roberta Sykes Indigenous Education Foundation the amendments apply to gifts made after 2 August 2010. The name change to Girl Guides Australia applies from 1 January 2011.

Proposal announced : The listing of Charlie Perkins Trust for Children & Students, and the Roberta Sykes Indigenous Education Foundation as DGRs was announced in the 2010-11 Mid-Year Economic and Fiscal Outlook.

Financial impact : This measure will have the following revenue implications:

Self managed superannuation fund investment in collectables and personal use assets

Schedule 2 to this Bill amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) to permit the regulations to impose rules on self managed superannuation fund (SMSF) trustees that make, hold or realise investments involving collectables or personal use assets. These amendments apply in relation to investments made by an SMSF before, on or after 1 July 2011. The regulations may specify that the amendments apply to only some of these investments. The regulations may prescribe penalties for non-compliance with the rules set out in the regulations, not exceeding 10 penalty units.

This Schedule also amends the SIS Act to remove a reference to a provision that was repealed on 24 September 2007.

Date of effect : 1 July 2011.

Proposal announced : This proposal was announced as a Government election commitment and titled ' New Standards for Storing Collectables and Personal Use Assets Held by Self Managed Superannuation Funds' on 30 July 2010.

Financial impact : Nil.

Compliance cost impact : Nil.

Superannuation - tax file number amendments

Schedule 3 to this Bill amends the Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997 to allow superannuation fund trustees and retirement savings account providers to use tax file numbers (TFNs):

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as a method of locating member accounts; and

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to facilitate the consolidation of multiple member accounts.

Date of effect : 1 July 2011 for the amendments to use TFNs to locate accounts, and 1 January 2012 or a date to be proclaimed for the consolidation amendments.

Proposal announced : This measure was announced in the Assistant Treasurer and Minister for Financial Services and Superannuation's Media Release No. 024 of 16 December 2010.

Financial impact : Nil.

Compliance cost impact : Low.

Exempting Australian taxes, fees and charges from the goods and services tax

Schedule 4 to this Bill amends:

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the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to replace the current mechanism for ensuring Australian taxes, and certain Australian fees and charges are not subject to the goods and services tax with specific legislative exemptions;

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the GST Act to allow for the making of regulations to treat an Australian tax, or an Australian fee or charge in a particular way; and

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the A New Tax System (Luxury Car Tax) Act 1999 to account for changes being made to the GST Act.

Date of effect : These amendments apply from 1 July 2011.

Proposal announced : This measure was announced in the 2010-11 Budget.

Financial impact : Nil.

Compliance cost impact : These amendments are expected to result in a low overall compliance cost impact, comprised of a low implementation impact and a low decrease in ongoing compliance.

Miscellaneous amendments

Schedule 5 to this Bill makes technical corrections and other minor and miscellaneous amendments to the taxation laws. These amendments are part of the Government's commitment to the care and maintenance of the tax system.

Date of effect : These amendments commence from Royal Assent unless otherwise stated in this explanatory memorandum.

Proposal announced : These amendments were all foreshadowed by their release in draft form on the Treasury website on 28 January 2011.

Financial impact : The amendment to allow the nomination of controllers of discretionary trusts for the purposes of capital gains tax small business concessions (Part 19, comprising items 91 to 105) is expected to result in a small cost to revenue (with an upper bound of $10 million per annum).

The other amendments are expected to have nil to minimal revenue impacts.

Compliance cost impact : Nil to low.