House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar MP.)

General outline and financial impact

Schedule 1 - Making tax free certain small business grants relating to the coronavirus recovery

Schedule 1 to the Bill amends the income tax law to make payments received by eligible businesses under certain grant programs administered by a State or Territory Government (or a State or Territory authority) non-assessable non-exempt income so that these payments are not subject to income tax by the Commonwealth.

To obtain this concessional treatment, among other things, the payment must be made under a grant program that is declared by the Minister to be eligible and is, in effect, responding to the economic impacts of the Coronavirus. Accordingly, Schedule 1 to the Bill gives the Minister power to declare certain grant programs as eligible for non-assessable non-exempt income tax treatment under an instrument-making power.

Date of effect: The changes to the income tax law apply to the 2020-21 income year and later income years.

Proposal announced: Schedule 1 to the Bill implements the measure 'Making Victoria's business support grants non-assessable, non-exempt income for tax purposes' from the 2020-21 Budget.

Financial impact: The introduction of the instrument-making power does not have any financial implications. However, financial implications may arise each time the power is exercised and will be reflected in the subsequent fiscal update.

Human rights implications: Schedule 1 does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4.

Compliance cost impact: This measure is expected to have no more than a minor regulatory impact.

Schedule 2 - Payment of amounts to KiwiSaver scheme provider

Schedule 2 to the Bill amends the SUMLM Act and the ITAA 1997 to facilitate the payment of money held by the Commissioner under the SUMLM Act directly to New Zealand KiwiSaver schemes.

Date of effect: Schedule 2, Part 1 of the Bill commences on a single day to be fixed by Proclamation. However, if Part 1 does not commence within the period of 12 months beginning on the day the Bill receives Royal Assent, the Part commences on the day after the end of that period.

Schedule 2, Part 2 commences on the later of the commencement of Schedule 2, Part 1 and immediately after the commencement of Schedule 1 to the Treasury Laws Amendment (Reuniting More Superannuation) Act 2020. However, Part 2 does not commence at all if Schedule 1 of the Treasury Laws Amendment (Reuniting More Superannuation) Act 2020 does not commence.

Proposal announced: Schedule 2 to the Bill fully implements the measure Cutting Red Tape - lost and unclaimed superannuation from the 2015-16 Budget.

Financial impact: Schedule 2 to the Bill is estimated to have a negligible impact on the underlying cash balance over the forward estimates period.

Human rights implications: Schedule 2 does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4.

Compliance cost impact: Negligible.

Schedule 3 - Deductible gift recipients

Schedule 3 to the Bill amends the ITAA 1997 to make Neighbourhood Watch Australasia a deductible gift recipient under the income tax law.

Date of effect: The amendments apply to gifts made on or after 1 July 2019.

Proposal announced: Schedule 3 partially implements the measure 'Philanthropy - updates to the list of specifically listed deductible gift recipients' from the 2019-20 MYEFO.

Financial impact: The component of the MYEFO measure being implemented by this Schedule was estimated to have a negligible cost to revenue over the forward estimates period at the time of the 2019-20 MYEFO.

Human rights implications: Schedule 3 does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4.

Compliance cost impact: Nil.