House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer,the Hon. J. Kerin, M.P.)

Chapter 29 Minor Technical Amendments

[Clause: 2, 12, 13, 33, 41, 44]

Overview

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Wool tax

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Clarifying amendment

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Overseas employment income

Part 3B - Amendment of the Wool Tax (Administration) Act 1964

29.1. A "registered laboratory" is currently defined in the Wool Tax (Administration) Act 1964 to have the same meaning as in the Wool Marketing Act 1987 . The Wool Marketing Act was repealed on 1 July 1991 and replaced with the Australian Wool Corporation Act 1991 and the definition of "registered laboratory is now contained in that Act.

29.2. The definition of "registered laboratory" in the Wool Tax (Administration) Act 1964 is being amended to provide that it has the same meaning as in Part 10 of the Australian Wool Corporation Act 1991 . The amendment is taken to have commenced on 1 July 1991.

Miscellaneous Minor Clarifying Amendments

Summary of proposed amendments

29.3. Several minor amendments are proposed to clarify the operation of certain deduction provisions which are expressed to be subject to the same limitations on deductibility as section 51.

29.4. The changes make clear what the provisions mean.

Background to the legislation

29.5. Several deductions are qualified by a provision which states:

"A provision of this Act (including a provision of section 51) that expressly prevents or restricts the operation of section 51 applies in the same way to this provision."

29.6. It has been suggested that subsection 51(1) itself contains express restrictions on the operation of section 51, in the form of the exclusion of expenditure of a capital, domestic or private nature or expenditure incurred in deriving exempt income.

29.7. Tax-related expenses, deductible under section 69, might be thought to be affected. And deductions for certain expenses on mine site rehabilitation, available under Division 10AB, might be thought to exclude capital expenditure, even though subsection 124BA(1) applies to expenditure "whether of a capital nature or otherwise".

29.8. Although the provision was not intended to and should not be read that way, the proposed amendment will remove any doubt as to the proper interpretation of the provisions.

Explanation of the proposed amendments

29.9. Each of the relevant provisions will be amended to insert the words "other than subsection 51(1)" after the first reference to "section 51" to remove any doubt as to the intended effect of the provisions. [Clauses 33, 41 and 44]

Commencement date

29.10. The amendments will take effect from the date of Royal Assent of the Bill.

Clauses involved in the proposed amendments

Clause 2 : Date of effect.

Clause 33 : Amends subsection 69(6).

Clause 41 : Amends subsection 113(4).

Clause 44 : Amends subsection 124BA(2).

Technical changes to exemption of income earned in overseas employment.

29.11. The Bill will make two minor technical corrections to the provisions of the Income Tax Assessment Act that deal with the taxation of foreign employment income where the period of continuous overseas service is between 3 months and 12 months. Since 1 July 1990 a full exemption has been available where overseas service has been 91 days or more. Before that date a proportionate exemption was allowed if the service was between 91 days and 365 days. The amendment will delete the now redundant references to a part exemption.

Clauses involved in the proposed amendments

Clause 12 : amends paragraph 23AF(15)(b) of the Income Tax Assessment Act to remove the redundant reference to partial exemptions.

Clause 13 : amends paragraph 23AG(6F)(b) of the Income Tax Assessment Act to remove the redundant reference to partial exemptions.