House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)

Zone and related rebates

Summary of proposed amendments

Purpose of amendment: The Bill will amend the income tax law to increase the current fixed dollar amounts in these rebates by 12.5% for the 1992-93 assessments and 25% for assessments in subsequent years of income.

Date of Effect: The amendments will apply to assessments for the 1992-93 and subsequent years of income.

Background to the legislation

Special income tax arrangements, through zone rebates, have applied to taxpayers residing in remote areas since 1945.

Section 79A of the Principal Act provides that the level of a taxpayer's zone rebate is equal to a fixed dollar value applicable to the taxpayer's zone of residence and a specified percentage of the sum of any dependent, housekeeper, sole parent and notional child rebates to which the taxpayer is entitled ('the relevant rebate amount' (RRA)). The fixed dollar amounts of the rebates have not been increased since 1984 but the RRA has increased because of increases in the component rebates. Some components in the RRA have been indexed anually for the 1990-91 and subsequent income years through the application of section 159HA.

The rebates at present are -

Sections 23AB and 79B of the Principal Act also provide rebates comparable to those for ordinary zone A for certain persons serving with an armed force under the control of the United Nations, and members of the defence forces serving overseas.

Explanation of proposed amendments

The Bill proposes to amend sections 23AB, 79A and 79B of the Act to increase the current fixed dollar components in the rebates by -

(a)

12.5% for assessments in respect of the 1992-93 year of income; and

(b)

25% for assessments in respect of the 1993-94 and subsequent years of income.

[Clauses 14, 15, 16 and 17]