Revised Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Tax exemption for ex-gratia payments to New Zealand non-protected special category visa holders
Outline of chapter
3.1 Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to exempt from income tax ex-gratia payments to New Zealand non-protected special category visa holders for the floods that occurred in New South Wales and Queensland in early 2012.
Context of amendments
3.2 New Zealand citizens who arrived in Australia after 26 February 2001 are classified as non-protected special category visa holders and are not eligible for the Australian Government Disaster Recovery Payment.
3.3 The Australian Government Disaster Recovery Payment provides short-term financial assistance to individuals adversely affected by a major or widespread disaster, such as the floods that occurred in New South Wales and Queensland in early 2012.
3.4 In light of the hardship these recent floods may have caused New Zealand special category visa holders, the Government agreed to make ex-gratia payments to affected eligible New Zealand special category visa holders.
3.5 The ex-gratia payment provides financial assistance to New Zealand citizens living in Australia who hold a non-protected special category visa (subclass 444) and who are adversely affected by the flooding that began in January 2012 in the local government areas of New South Wales and Queensland where the Australian Government Disaster Recovery Payment has been made available from February 2012.
3.6 The ex-gratia payment reflects the Australian Government Disaster Recovery Payment rates of $1,000 for eligible adults and $400 for eligible children.
3.7 The ex-gratia payment is administered by the Department of Human Services, and can be claimed until and including 6 August 2012.
3.8 Exempting from income tax the ex-gratia payment to New Zealand special category visa holders who have been affected by the recent floods in New South Wales and Queensland ensures that the payment receives the same tax treatment as the Australian Government Disaster Recovery Payment made to eligible individuals.
3.9 It is also consistent with the exemption provided to New Zealand special category visa holders who received an ex-gratia payment because they were adversely affected by the floods that occurred in Australia during the 2010-11 summer, or Cyclone Yasi which devastated parts of Queensland in February 2011.
Summary of new law
3.10 This measure amends section 51-30 of the ITAA 1997 to list the assistance for New Zealand non-protected special category visa holders as exempt from income tax if it has been claimed after 5 February 2012 and before 7 August 2012.
Detailed explanation of new law
3.11 Section 11-15 of the ITAA 1997 lists income which is exempt from income tax. This list will be amended to include the assistance for New Zealand non-protected special category visa holders for the floods that occurred in New South Wales and Queensland in January, February and March 2012. [Schedule 3, item 1]
3.12 Section 51-30 of the ITAA 1997 contains a table listing welfare payments that are exempt from income tax and any exceptions and special conditions that must be met to qualify for the exemption.
3.13 The amendment to section 51-30 will make the assistance for New Zealand non-protected special category visa holders for the floods that occurred in New South Wales and Queensland in January, February and March 2012 exempt from income tax. [Schedule 3, item 2]
Application and transitional provisions
3.14 These amendments exempt from income tax ex-gratia payments made to New Zealand non-protected special category visa holders who were adversely affected by the floods that occurred in New South Wales and Queensland in January, February and March 2012, where these payments are made after 5 February 2012.
3.15 These amendments will be repealed on 1 July 2015, by which time the amendments would have become inoperative. [Schedule 3, items 3 and 4]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Tax exemption for ex-gratia payments to New Zealand non-protected special category visa holders
3.16 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .
Overview
3.17 This Schedule amends the ITAA 1997 to exempt from income tax ex-gratia payments to New Zealand non-protected special category visa holders for the floods that occurred in New South Wales and Queensland in early 2012.
Human rights implications
3.18 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
3.19 This Schedule is compatible with human rights as it does not raise any human rights issues.
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