Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 5 - Amendments to the oral rulings for individuals regime

Outline of Chapter

5.1 Amendments contained in Schedule 4 will amend proposed Division 360 of Schedule 1 to the TAA 1953. This Division provides for binding oral advice to be given on income tax matters. The amendments are minor and:

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take account of amendments made to the ITAA 1936 and ITAA 1997 by the ANTS (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999 and the ANTS (Family Assistance) (Consequential and Related Measures) Act (No. 2) 1999 ; and

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ensure that an oral ruling can only be made by a person who is authorised to perform a function, or exercise a power, of the Commissioner under proposed Division 360. The authorised person must perform the function, or exercise the power, at places approved by the Commissioner.

Detailed explanation of new law

Amendments to Schedule 1 of the TAA 1953

Items 42 to 44

5.2 Provision being amended :Proposed subsection 360-60(1), which provides that where the Commissioner delegates his powers and functions to a person, that person must perform the function, or exercise the power, only at places specified in the delegation.

5.3 Amendment will : Ensure that an oral ruling can only be made by a person who is authorised to perform a function, or exercise a power, of the Commissioner under proposed Division 360. The authorised person must perform the function, or exercise the power, at places approved by the Commissioner.

5.4 Reason for amendment : The amendment will align arrangements for binding oral advice with the standard approach to delegations and authorisations taken in the income tax law.

Items 45 and 46

5.5 Provision being amended : Proposed section 360-75, which specifies what exempt income a person may have and still be eligible for binding oral advice.

5.6 Amendments will :

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repeal table item 35 which refers to child care assistance and child care rebate as provided for by section 52-120 of the ITAA 1997; and

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insert item 53 which refers to family assistance payments as provided for by section 52-150 of the ITAA 1997.

5.7 Reason for amendment : It is necessary to repeal table item 35 as the existing child care assistance and child care rebate payments are replaced by the child care benefit for the 2000-2001 year of income and all later years of income.

5.8 It is necessary to insert item 53 as section 52-150 provides that payments of child care benefit, family tax benefit, maternity allowance and maternity immunisation allowance are exempt from income tax for the 2000-2001 year of income and all later years of income. This amendment will ensure that taxpayers in receipt of these payments, and who have simple tax affairs and simple enquiries, are not excluded from the binding oral advice regime.

Item 47

5.9 Provision being amended : Proposed section 360-80, which specifies what deductions a person may have, and still be eligible for binding oral advice.

5.10 Amendment will : Insert a provision which includes deductions under section 25-7 of the ITAA 1997 in the basic categories of deductions.

5.11 Reason for amendment : This amendment will ensure that taxpayers with simple tax affairs and simple enquiries are not excluded from the binding oral advice regime where they incur a fee or commission for advice about family tax benefit, as mentioned in section 25-7 of the ITAA 1997. This deduction is available for the 2000-2001 year of income and all later years of income.

Item 48

5.12 Provision being amended : Proposed section 360-85, which specifies what tax offsets a person may have, and still be eligible for binding oral advice.

5.13 Amendment will : Repeal table item 10 which refers to the sole parent rebate as provided for in section 159K of the ITAA 1936.

5.14 Reason for amendment : The existing sole parent rebate will be replaced by the family tax benefit and will no longer be available in assessments in relation to the 2000-2001 year of income and all later years of income.